Roger Williams: The Secretary of State will be aware of the successof community support officers as the visible sign of authority in some communities. Will he make representations to the Home Office and to the Assembly to ensure that there is a roll out of community support officers, who have been so successful in Llandrindod Wells in tackling this terrible problem but do not yet operate in Ystradgynlais, from where I receive a continuous stream of complaints about the quality of life being disrupted by antisocial behaviour?

Adam Price: what change there has been in the number of manufacturing jobs in Wales since 1997.

Peter Hain: I am astonished that the hon. Gentleman describes our record on the Welsh economy as "dismal", when there are record numbers of jobs and when Welsh manufacturing is doing better than manufacturing elsewhere in the United Kingdom. New companies are coming in—for example, G24 Innovations has announced that it will create 300 jobs in Cardiff through its £16 million investment—and more jobs are being created in high-tech manufacturing all the time. Yes, low-cost manufacturing is disappearing to low-cost countries. Tata Steel is a huge Indian conglomerate, and the implications of its bid are not clear. I understand that it wants to invest in steel in the United Kingdom and to take advantage of the enormous growth in India by producing steel, including in Wales.

Mark Williams: May I press the Secretary of State a little more on the timetable forthe new round of convergence funding? He knows that the Welsh European Funding Office is currently giving advice to prospective applicants, but cannot give a precise date,
	"as this is subject to the negotiation process with the EU Commission in late 2006, which may run into early 2007."
	Does he agree that there is a healthy impatience to get the matter resolved, not least because many projects are waiting in the pipeline? They include the development of renewable energies and energy efficiency, which fulfil some of the Lisbon criteria, and many small-scale community projects that do not. None the less, they all need the green light and cannot wait indefinitely.

Madeleine Moon: Will the Minister join me in congratulating the Park Supporting Family Forum, which works with prisoners in Park prison in my constituency to roll out programmes to prevent reoffending and to ensure that family links with prisoners are maintained? Will he also urge Bridgend county borough council—

Tony Blair: No, our policy remains to ensure that Iraq continues as a democracy. We have a democracy in Iraq for the first time in that country's history, and70 per cent. of the people came out and voted in the election, which is an extraordinary achievement, despite all the terrorism and intimidation. What is more, they voted for a non-sectarian Government in which the Sunni, the Shi'a and the Kurds all work together. I believe that the maintenance of democracy is absolutely essential for us, in Iraq and in Afghanistan. I know it is difficult, but our task is to stand with the moderates in those countries against the extremists.

David Chaytor: Recently, the British Nuclear Group was fined £500,000 after pleading guilty to the leak of 80,000 litres of spent nuclear fuel at Sellafield. Some 25 per cent. of British Energy's share price was wiped out, after it admitted to cracks in the boilers at Hunterston B and Hinkley Point, as well as underground leaks at Hartlepool. Will my right hon. Friend confirm that if, after all that, someone comes forward with a plan for a new fleet of nuclear power stations, the Government's policy remains that there will be no further subsidy from the taxpayer?

Tony Blair: Our policy remains exactly as is, and it is important that it does so. My hon. Friend's point, however, is a perfectly good one. There are all those issues to do with replacing the existing generation of nuclear power stations. The reason why the issue is on the agenda, as we can tell clearly from the launch earlier in the week of the Norwegian-British pipeline, is that, over the next few years, this country will go from being 80 to 90 per cent. self-sufficient in oil and gas to importing 80 to 90 per cent. Obviously, those are fossil fuels, and there is a danger that we will become increasingly dependent on imported supplies of energy. It is therefore right that we replace existing nuclear power stations. But of course all the points that my hon. Friend raises must be taken into consideration.

Menzies Campbell: But surely we are entitled to question the strategy to which the Government are committed. Is it not clear that the opinions expressed by General Dannatt, Brigadier Butler, Senator John Warner and now James Baker only lead to one conclusion—that the Government's strategy has failed? In those circumstances, the choice is stark: change the strategy or else get out.

Tony Blair: I think I can give that commitment. We have already committed some £38 million to victims' groups since 1998, and spending currently stands at£5 million a year. I am aware of the excellent work being done by Bertha McDougall as victims commissioner, and I look forward to her final report. We will look positively at her recommendations for future funding and her suggestions for spending the money more effectively.
	I also thank the hon. Gentleman and his colleagues for the constructive role that they played in the talks at St Andrews last week. I hope very much that the shared future of which I spoke from the Dispatch Box last week is somewhat further advanced now. I also hope that we can all continue to work closely to ensure that the institutions in Northern Ireland are up and running again, and that Northern Ireland's future is secure.

Tony Blair: We can certainly examine all the options. We should and we will. I hope, however, that the right hon. Gentleman will not tell post offices that he will spend even more money on Government subsidy than we are spending.
	I might just point out that when we came to office nothing was really being done to support rural post offices. We have spent— [Interruption.] Let me give the facts; then I will explain what the difficulty is.
	We have spent something in the region of £2 billion, and we are currently subsidising post offices to the tune of £150 million a year. I entirely understand why the issue is of concern to people—of course it is—but the reason there is a problem is that more and more people are using bank accounts rather than the post office. It is important to realise that there is a process of change that any Government would have to handle. Of course we will consider all the options, but what we will not be able to do is say that even more subsidy is available than the money that we are already putting in.

Tony Blair: My hon. Friend makes a very important point about the DNA database. The police are now matching something like 3,000 offences a month and literally hundreds of murders, manslaughters, rapes and other serious offences have been solved as a result of that database. The Conservative party was opposed to it on the basis that it transgressed people's civil liberties, but it is important to build up the DNA database, which provides a vital way of fighting crime in the modern world. If people are serious about fighting crime, they cannot allege that we are not doing enough and then oppose the very measures necessary to do it.

Lembit �pik: Will the Prime Minister join me in praising the UK's air ambulances, which help thousands of patients and save hundreds of lives? Does he realise that the service survives entirely on voluntary donations and that, unless we find a sponsor, the mid-Wales helicopter will be withdrawn for the winter? Is he aware that its ambulances are barred from applying for big lottery funds? Will he facilitate a meeting to resolve what amounts to an anomaly, so that the service can apply to the lottery fund in order to upgrade its aircraft and continue its life-saving services?

Jeff Ennis: Is the Prime Minister aware of the five good GCSE pass rates for Willowgarth high school in Grimethorpe, one of the most deprived parts of my constituency? I have served on the school's governing body since 1979. The pass rate last year was 38 per cent. and this year it is 67 per cent. Furthermore, for the boys, it has gone up from 34 per cent. last year to73 per cent. this year. Is that yet further evidence of what the Prime Minister meant when he said that the Government were making education their top priority?

Peter Viggers: When the servicemen and women of other nations are exposed to injury, they are given the best possible medical treatment, often in military hospitals, whereas ours are handed over the national health service. Does the Prime Minister recognise that moving Defence Medical Services to Birmingham has not worked and will not work in future? Will he yield to overwhelming pressure indicating that our only military hospital, the Haslar hospital in Gosport, should be retained?

Tony Blair: I simply do not agree with the hon. Gentleman at all. First, I pay tribute to the work that is done by the Defence Medical Services and also to the work that the NHS is doing in looking after those soldiers who are injured.
	As there has been a lot of discussion about Selly Oak hospital in the news in the past few days, I should at least give it the chance to respond. It has issued a statement that has not been particularly well covered, but I would like to quote from two parts of it. It says:
	In the main, the articles
	in the media
	 are inaccurate, unbalanced, ill-informed and unsubstantiated.
	That is not exactly surprising, but it goes on to say:
	On no occasion has the Trust been approached to comment on any of the allegations. There have been reports of an alleged Muslim visitor verbally abusing a paratrooper at Selly Oak Hospital. Neither the Trust, nor the Ministry of Defence, has any formal or anecdotal reports or evidence that this alleged incident took place.
	The statement adds that patients are getting an excellent standard of care and there are no complaints either from the patients themselves or from those who are charged with looking after them.
	I have saidI believe it is rightthat it is important that our soldiers, particularly those who are wounded in battle, are looked after to the best possible extent. The use that is made of NHS specialist services is important in that. Those soldiers should be in an environment in which they feel comfortable, and we will look to make sure that that is the case. But I think that it would be quite wrong of people to criticise the national health service for the way that it has looked after these people, because I know that the staff are doing their level best in difficult circumstances.

Tony Blair: If the hon. Gentleman will forgive me, I will not comment on the royal visit. However, I will say that we have raised this case constantly with the Pakistani authorities and I raised it personally with President Musharraf when he was here a couple of weeks ago. I hope, even at this stage, that there is an intervention to ensure that this does nottake place; it would be very serious if it did. There is a limit to what the President can do, but I hope that he can use his powers, and we will continue to make representations right up until the last moment. I can assure the hon. Gentleman of that, because we have raised the case on many occasions for all the reasons that are well known.

Ben Chapman: Given its potential to engage young people in politics, to teach respect and responsibility in communities and societies and to tackle disengagement and antisocial behaviour, does my right hon. Friend share my considerable disappointment at Ofsted's reporting of poor standards of teaching in citizenship? Will hesee that its recommendations are implemented comprehensively and swiftly?

James Paice: Now that the National Audit Office has laid bare the chaos of the Rural Payments Agency, and given the potential fine of 141 million by the European Union because of the inaccuracies, plusthe fact that the then Secretary of State was warned in June 2005 that the project was off course and yet did nothing, what sort of Government do we have that keep the then chief executive on full pay six months after he was sacked, and promote the responsible Minister to Foreign Secretary?

Lynne Jones: In June, my right hon. Friend told me that the Government need to do more on social housing, yet in the forthcoming two years Birmingham city has so far been allocated less money for new social housing than in the previous two years. What sense does it makefor housing benefit to have been paying, for the last 20 months, 635 a month for Mr. and Mrs. Garghen in my constituency and their five children to be accommodated in inadequate temporary accommodation, when had we had a decent council house-building programme, the rent would have been less than half that amount?

Iain Duncan Smith: I beg to move,
	That leave be given to bring in a Bill to make provision about liability for suicide; and for connected purposes.
	May I also say how pleased I am to see that the Leader of the Opposition, my right hon. Friend the Member for Witney (Mr. Cameron), is in his place to listen to my argument? I know how strongly he feels about this subject.
	I wonder how many Members realise the extent of domestic abuse in this country. Let me give some figures. One in four women in Britain are abused in some form or another. More particularly, one in nine suffer physical abuse on a regular basis, and worse, every week two women are killed as a result of such abuse.
	When I first discovered those figures, I was absolutely horrified. That happened as a result of my involvement with the Centre for Social Justice. I had discussions with Sandra Horley of Refuge, who explained the full extent of such abuse to me. I pay tribute to Refuge for the remarkable work that it does in helping those who have been, or are being, abused, and in particular to Sandra Horley, the chief executive, whose energy and commitment is phenomenal.
	I urge the Government to think positively about including an offence of liability for suicide in any new legislation, and also carefully to consider expanding the definition of diminished responsibility so that it includes a proper recognition of psychological injury. That would allow the courts properly to take account of a broader range of psychological impacts on victims of abuse.
	Research undertaken in the UK and abroad demonstrates that there is a causal link between attempted or completed suicide and concurrent experience of domestic violence. In 2000, UK statistics showed that between 30 and 40 per cent. of female suicides were committed by those who had been subjected to domestic violence. In the United States, research has shown that there is a temporal connection between suicide attempts and hospital treatment for injuries resulting from domestic violence. Importantly, this research went on to show that, of the victims of domestic violence who had attempted suicide, nearly 70 per cent. had done so within six months of hospital treatment, and, staggeringly, that nearly 40 per cent. had done so on the same day, after discharge.
	Let me illustrate all this by outlining the recent case of Mrs. Gurjit Dhaliwal, who hanged herself at the family home in Southall, west London, on 22 February 2005. Mrs. Dhaliwal's brother, Nav JagpalI understand that he is here todaysaid that he and his family had watched helplessly while his sister had suffered abuse over a sustained period, going back to 1979. Mrs. Dhaliwal had temporarily left her husband on a number of occasions because of the abuse; however, each time she returned. When the police found her after the suicide, they noticed that she had fresh cuts to her forehead, and they also discovered on searching the house a journal that she had kept over the last five months of her life, in which she harrowingly alleged physical and emotional abuse by her husband. In fact, Mr. Dhaliwal even admitted on questioning that he had hit her on the evening that she died. Because of that admission, the Crown Prosecution Service decided to proceed against Mr. Dhaliwal on a charge of manslaughter, on the basis that this behaviour caused his wife to kill herself.
	It might assist the House if I try to explain some of the incredible twists and turns necessary under existing English law in trying to prosecute this case. There are various routes to achieving a verdict of manslaughter. In this case, the CPS tried to prove that the defendant had done something unlawful and dangerous that had caused Mrs Dhaliwal's death. However, as a foundation for such a charge of an unlawful act in English law, a prosecution has ultimately to prove that the act or those acts caused, or contributed significantly to causing, the death of the deceased.
	To do that, the prosecution had to use a definition established in an Act of Parliament passed in 1861, together with more recent case law equating psychiatric injury with bodily harm, the proposition being that Mrs. Dhaliwal had suffered psychiatric injury as a result of this pattern of domestic violence, and that that amounted to bodily harm in the meaning of the legislationa complicated scenario. Interestingly, on the evidence of a number of experts, who disagreed throughout the case, the court had to rule that Mrs. Dhaliwal had suffered psychological injury, but because that fell short of psychiatric injury, it did not amount to the bodily harm definition necessary according to the law.
	Let me quote what the Court of Appeal judge, Judge Roberts QC, said in summing up:
	It is very hard not to see some connection between the incident of violence which appears to have taken place shortly before and her death.
	However, it was ruled that under the Offences Against the Person Act 1861, essentially, it was not possible to stretch the definition of psychological injury so that it could count as bodily harm. Recognising the problem, the Court of Appeal said that it would be more satisfactory if the law provided a less convoluted route in a manslaughter conviction in cases of this kind. The following is the most apposite quote from the judge:
	I would have thought there was some force in the argument that the 'last straw' played a significant part in causing her death.
	I would add that in fact, that is common sense. Surely there is hardly anybody in this Chamber or among the general public who has not long believed that there are often connections between suicide and things that have gone on before.
	Refuge's recent experience of supporting Mr. Nav Jagpal in the case of his sister, Mrs. Dhaliwal, and of other cases, has led it to believe that the law as it stands offers little or no justice to such women, or to the families whom they leave behind.
	I know what the House will say. Many will say that hard cases make bad laws, but I am not trying to persuade the House or the Government to change the law simply because of one case. It is not an isolated case. I offer up this case because it is such a high-profile example of what Refuge and many other campaigners believe is a failure of natural justice. It is absurd to have to rely on an Act that was passed in 1861, before psychiatry was even born and before the link between physical and mental trauma was fully appreciated. That position is supported by a number of national newspapers, including  The Sun and  The Times, which featured articles on this matter.
	Surely the law should recognise that there are some assaults that, taken in isolation, may not appear to be life threatening, but which, when combined with a pattern of behaviour over a period of time, could result directly in the victim taking their own life. Abuse is not just about the physical effect. Someone who is regularly attacked suffers psychological problems, and that psychological damage can ultimately be more harmful than the individual and often isolated instances of physical abuse.
	I know that it is tempting for someone listening to this speech to say that they do not understand what the problem is, and that someone being abused should just leave. I suppose that in a simplistic and perfect world that would be the case every time, but I am afraid that the world is not that simple, and the situation is much more complex than that. Far too many victims of abuse make qualified decisions to stay with their abuser because they cannot leave. Perhaps the fear of leaving their children behind is part of that, or the fear of having no one to turn to and no place to go, or the absence of any money. Perhaps most of all, there is the fear that should they fail to get away cleanly, the abuse that they will suffer on their return will be much greater.
	Domestic violence is a major problemin some cases, possibly because of changes to the way in which people live today, with more single women bringing up children on their own. However, domestic abuse is also found in what appear to be some of the most stable households. The key point that we should all admit and accept is that we must never make any excuse for the abuser. Abusers have no excuse. Their abuse is their responsibility, and they should face the consequences of that abuse. That is why I ask the Government to help us and the House genuinely to consider this motion for a new law of liability for suicide. We should not have to watch as any further cases collapse because the abuser's victim is dead and thus unable to testify. After all, even in financial terms, domestic violence is estimated to cost the country at least 23 billion a year.
	I will leave the House not with my words, but with those of Mrs. Dhaliwal's brother, Nav Jagpal, who has campaigned strongly on this matter. After the failed attempt to prosecute, he said:
	it is unbelievable that we are allowing this kind of thing to happen all over the country.
	He concluded, movingly:
	I could not save Gurjit but I will not let her death be in vain.
	 Question put and agreed to.
	Bill ordered to be brought in by Mr. Iain Duncan Smith, Mrs. Claire Curtis-Thomas, Mrs. Nadine Dorries, Dr. Liam Fox, Mrs. Louise Ellman, Lembit pik, Justine Greening, Mr. Edward Vaizey and Jim Dobbin.

[Relevant document: The Twenty-eighth Report from the Joint Committee on Human Rights, Session 2005-06, Legislative Scrutiny: Fourteenth Progress Report,HC 1626.]
	 As amended in the Standing Committee, further considered.

Mr. Speaker: With this it will be convenient to discuss the following:
	Amendment (a) to the proposed new clause, at end of subsection (2), insert
	'and potential customers to decide whether to purchase the company's goods or services.'.
	New clause 2 Reporting standards
	'(1) A business review must
	(a) state whether it has been prepared in accordance with relevant reporting standards, and
	(b) contain particulars of, and reasons for, any departure from such standards.
	(2) In this section, reporting standards means statements of standard reporting practice which the Secretary of State shall ensure are issued and which
	(a) relate to business reviews, and
	(b) shall be issued by a body or bodies specified in an order made by the Secretary of State.
	(3) References in this section to relevant reporting standards, in relation to a company's business review, are to such standards as are, in accordance with their terms, applicable to the company's circumstances and to the review.
	(4) Where or the extent that the directors of a company have complied with a reporting standard, they are presumed (unless the contrary is proved) to have complied with the corresponding requirements of this Part relating to the contents of a business review.'.
	New clause 75 Requirement for audit of business review
	'The auditors must state in their report
	(a) whether in their opinion the information given in the business review for the financial year for which the annual accounts are prepared is consistent with those accounts; and
	(b) whether any matters have come to their attention, in the performance of their functions as auditors of the company, which in their opinion are inconsistent with the information given in the business review.'.
	Amendment No. 1, page 196, line 30, leave out Clause 423.
	Amendment No. 760, in clause 423, page 197, line 2, leave out
	'In the case of a quoted company'.
	Government amendments Nos. 821 and 822.

Jon Trickett: New clause 1, which I tabled, has been signed by 51 other hon. Members. That significant body of opinion indicates the strength of feeling about the subjects with which the measure deals.
	One of the historical roles of the House has always been to attempt to protect the general social interest against specific actions of private interests. The Bill is an attempt to do that, but with a light touch. It is clear that corporations have become increasingly important actors both inside the United Kingdom and on a global scale. Many of the world's largest companies are absolutely enormous. The fact that Wal-Mart, the world's biggest corporation, is larger than 150 nation states shows the size of the private interests that are emerging. It is for nation states and national Parliaments to reflect on private power and its consequences and to attempt, albeit in a way that is not too burdensome, to protect the social interest.
	I noted that the hon. Member for Huntingdon (Mr. Djanogly) claimed in the House yesterday that corporate social responsibility, which is the name that we give to the attempt to encourage companies to behave more responsibly, is now taken more or less seriously by all the larger companies based in this country. That was a sweeping andsome might saycomplacent statement, given that there are companies whose actions still cause problems both in the United Kingdom and abroad. For example, I draw the House's attention to the UK-based mining giant, Anglo American. A recent report indicated that poor communities in Ghana were seriously afflicted by environmental pollution that was a by-product of the company's operations. The water supply was poisoned and the farming land was degraded, so the local people could not carry out their traditional pursuits of fishing and farming.
	I do not want to give the impression that I am vilifying the whole of the UK corporate sector, but we must be honest in the House about the fact that, unfortunately, there are widespread examples of such actions. For example, it is said that Shell is in breach of statutes in the Niger delta by flaring off the by-products of its activities, which produces carbon dioxide and other greenhouse gases that damage the environment. It is suggested that Shell is producing as much pollution through its activities in the Niger delta as the rest of west Africa. It is also said that Tesco is using unfortunate techniques in relation to female workers in South Africa. The list goes on, so I do not need to strengthen my point. We should simply reflect on the fact that private power cannot be left totally unaccountable in this modern world, and that is the context of our debate.
	The Conservative party has been seen to represent the narrow class base of shareholder interest, but the right hon. Member for Witney (Mr. Cameron), at least, has realised that the party needs to break with that narrow sectional interest. He placed an advert in the newspapers in which he said that it was his business not to stand up for big business,
	but to stand up to big business when it's in the interest of Britain and the world.
	There was an understanding that a form of regulation for misbehaving companies was needed, and I began to think that the Conservative party might become part of a progressive consensus on corporate regulation. I was thus disappointed to read several of the speeches made, and amendments tabled, by Conservative Members.
	The right hon. Member for Witney said in a speech on 9 May:
	I've never believed that we can leave everything to market forces.
	He was quoted in  The Sunday Times on 7 May 2005 as saying that the regulation of companies
	clearly has an important role in ensuring competition and setting minimum acceptable standards.
	It was therefore assumed that the Conservatives would join in a consensus on light-touch regulation of business. That is precisely the type of regulatory framework that the Billthe largest piece of legislation ever to have come before the Housewould incorporate into law.
	At the centre of the Bill is the concept of enlightened shareholder value. Again, I should have thought that there would be a consensus across the House that if the aim is to ensure that the corporate sector operates in a socially responsible fashion, enlightened shareholder value could be at the core of any legislative framework that we introduce. I should have thought that it would be apparent to everyone that if shareholders are to have the capacity to act in an enlightened way, information, particularly information on the way in which the company is being managed by its directors, is key. That brings us to the heart of the provisions: the business review.
	The Bill as a whole is intellectually coherent. It proposes the concept of enlightened shareholder value, and an instrumentthe business reviewthat will enable shareholders to act in ways that secure the best interests of the company, applying a definition that goes beyond narrow financial considerations, and encompasses the environment, both social and ecological, in which the company operates. I would argue that the business review is the core of the Bill's intellectual underpinning. The Bill is a good piece of legislation, containing much that is to be welcomed. However, it seems to methis is why I proposed new clause 1that some of the detailed provisions on the business review could be extended. I note that the Government have been persuaded to table an amendment to new clause 1, to which I shall refer shortly.
	The business review requirement might be extended in relation to those categories of company that will be required to produce a review. There must always be boundaries around any piece of legislation, and it is for the House to define where those boundaries fall. The Bill therefore states which classes of company should produce business reviews. The Government have drawn the boundary around larger companiesby definition, those that are listed on the stock exchange. That will cover about 1,300 companies, which are among the largest in the UK. It is welcome that the Government have done that, but there are 4 million companies in the UK, and many are larger and have a greater impact on life in the UK and in the rest of the world than the companies that fall within that category.
	In new clause 1, I propose a modestI might even say timidextension to the category of companies that will be required to produce a business review.

Jon Trickett: My hon. Friend is right. Asda is part of the Wal-Mart group which, it is alleged, employs teams based at its headquarters in the United States to break trade unions. Such activities cannot be justified. We have seen little of that in the United Kingdom, but it is part of Wal-Mart's corporate strategy. Even more worrying is the allegation that the Wal-Mart group of companies receives supplies from thousands of factories in the People's Republic of China that pay workers 13 cents an hour, when the minimum wage in China is 31 cents an hour. It is probable that many of those commodities are entering the United Kingdom via Asda. It has been put to me that, as part of an American corporation, Asda cannot be covered by the legislation, but I have checked and found that Asda's corporate headquarters remain registered in the United Kingdom. I suggest to the Minister that Asda may well be covered by UK legislation.
	As my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins) has illustrated, many companies that have a huge impact on our social and ecological environment will be excluded from the Bill. This morning, I obtained a list of the top 10 private companies. John Lewis Partnership is owned by its employees. It is a model company that reports regularly on its social impact, but although it employs 63,000 people in the UK and has a turnover of 5 billion, the company will not be required to report under the Bill if new clause 1 is not added. If I was in charge of Tesco or another retailer and I was told that my company, because it is listed, will have to report, but my competitorsJohn Lewis Partnership or Asdawill not, because they are private companies or wholly owned subsidiaries, I would say that the playing field is not level.
	No logical intellectual case can be made for excluding larger private companies or subsidiaries that are registered in the UK. Littlewoods, which has 29,000 employees, will be excluded, as will another private company, John Swire and Sons, which has 76,000 employees. The case for requiring those companies to produce a business review is overwhelming. I understand that the Government had to draw a boundary somewhere, but I believe that we could extend the requirement beyond the 1,300 listed companies. The new clause would do that.
	In new clause 1, I suggest that medium-sized companies should also be included. Why should such companies be excluded? A medium-sized company is, by definition, quite a large operation: it may have a turnover of tens of millions of pounds and 250 or more employees. Such companies are significant players. I would like to hear the Minister's explanation of why the boundary was drawn where it was. If the Government accept new clause 1, the number of companies covered by the requirement to produce business reviews will increase from 1,300 to 36,000. That is a modest extension, given the fact that there are 4 million companies in the UK.
	The new clause would also correct some of the anomalies that will be thrown up by the Bill. We have discussed the retail sector and the anomaly that some retailers will have to produce business reviews but other, perhaps larger, companies will not. It is anomalous that Virgin will not have to produce a business review. The company claims to be environmentally soundthat is what Richard Branson regularly tells us and it is part of the image that he projects for his company, and I have no reason to doubt it. However, Virgin will not have to produce a business review, whereas British Airways will. How can it be right to have such an uneven playing field for the two companies, simply because of the definition set out in the Bill? Another excluded group of companies consists of those listed on the alternative investment market. Many companies with an AIM listing have a significant impact on our society and on the environment. It cannot be right that companies listed on the London stock exchange will have to produce a business review, but those on AIM will not.
	The second proposal in new clause 1 deals with supplier issues. There will probably be further debate about that, because the Minister has tabled her own amendment. I notice the expressions of what I regard as phoney outrage by the CBI in this morning's newspapers. That is unfortunate because the proposal is modest. If a corporation is to produce a business review which comments on those aspects of its activities which have an impact on the rest of society and on the environment, to exclude the supply chain would vastly diminish the amount of reporting required of the company. We are strongly in favour of the supply chain being included.
	It is often said that some of the supermarkets operating in the UK, which are increasingly dominant on the high street and elsewhere, use methods that have an oppressive effect on the agricultural sector in the UK and beyond. It is regularly argued that workers are being brought in from eastern Europe to produce agricultural productsstrawberries, potatoes and so onunder the most appalling conditions. They are employed not by Asda, Tesco or other supermarkets directly, but by suppliers. If the supply chain were brought within the remit of the Bill, it is arguable that horrific arrangements such as that of the cockle pickers and the gangmasters would be exposed at a much earlier stage, rather than in the tragic way in which that situation emerged. Supply issues are important, and it is good to see that the Government have reflected on the matter.

Jim Cousins: Much of what the hon. Lady says is welcome, but has she spotted that the business review that she supports would not cover, to take a significant climate change issue, Thames Water, a company that her constituents will have a great interest in?

Justine Greening: Throughout the Bill, the Government have been clear about what the business review is intended to do, and it is to be a narrative for the members of the company. I am sure that the Minister will want to deal with whether the Bill should have a much wider application to any company that is operating within UK jurisdiction. We need to strike the right balance with this legislation. That has been difficult to achieve and later we will debate whether we have achieved it. That has obviously partly been because it fits so clearly into a broader and important debate on the environment, but also because company law is necessarily limited in the extent to which it can be used as a vehicle to address such concerns.
	I fully recognise the concerns that the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) raised, but the question is what is the best way to address them. I agree with Lord Sainsbury and many others both from the Lords and in this place, including Ministers and Opposition Members, that company law is one way in which to pursue the need for companies to review more carefully the effect of their operations on the environment, but it is not the only route by which that can take place, so we need to be careful.
	As the Minister said, company law is not the best vehicle for addressing wider social and environmental concerns. We can address those objectives, as some Government Members have said, through domestic legislation, health and safety measures and environmental protection, on which progress has been made.

Justine Greening: We are in danger of making the business review far too prescriptive, particularly given that we know that more environmental legislation is likely to be enacted. What is needed is a narrative that has a good enough framework for the outcomes thatwe want, which include information for members on environmental issues and the impact on people, employees and communities. However, it should not be so prescriptive that it closes down the debate and potentially gives directors the chance not to disclose something, because it is not on the list that they have been given. I have no doubt that companies that care about corporate social responsibility reporting will want to give a full and useful report in the business narrative, which will allow members to see which companies take that responsibility seriously. We feel that the Government have got the balance right, which is why it is so perplexing that they seem unhappy with the business review.
	I will discuss new clause 1 shortly, but first I shall touch on amendments Nos. 821 and 822. I was surprised when the Minister tabled those amendments at such a late stage, because on Second Reading she said:
	The provisions on directors' duties, together with the provisions on narrative reporting, will give a huge boost to our corporate social responsibility agenda. If we went further, we would damage our success in attracting companies to incorporate in Britain, along with the economic growth and jobs that that brings. In a global economic environment with global markets, companies can choose where they wish to incorporate their business, so company law must focus on its core purpose to create the right environment for business success.[ Official Report, 6 June 2006; Vol. 447, c. 216.]
	Earlier this week, the Minister lost sight of that core purpose. Yesterday, the debate involved the point that directors have an overall duty to promote the success of their company. Do DTI Ministers not have the same duty to promote the success of British business? I am amazed that I am having to remind the Minister of the core purpose of her job.
	When did the Minister decide to table amendments Nos. 821 and 822? They appeared after the main body of amendments was published, so they were presumably tabled this week, but when did she take the decision and why has she tabled them? I have no doubt that we will receive an explanation, but perhaps she will cover who or what changed her mind on the business review, which the Government have supported since they ditched the operating and financial review. The Government have had the whole summer since the Bill was in Committee, so why were the amendments tabled so late? Why could the amendments not have been tabled last week?
	What steps did the Minister take to consult business on the impact of the amendments before her taking decision and was the advice from business given to Ministers? My understanding from the CBI is that the Minister conducted no consultation with business whatsoever. The CBI has said that the amendments will place an extra burden on businesses due to the costs of compliance and legal advice. The Institute of Directors has also expressed its concern about amendmentsNos. 821 and 822, saying:
	it is unacceptable for the government to table amendments that make significant policy changes at such a late stage and without any consultation.

Justine Greening: It is obviously difficult being in this position, as I have asked lots of questions about the amendment and had only one answered. That is why I had to make my best guess at working out which one the word, none, related to.
	Perhaps I may continue with my list of questions. What specific information does the Minister hope to elucidate from directors regarding corporate social responsibility that she did not believe would be disclosed in the business review as it stands? Whatever that information, how has she reached the conclusion that the value of that information outweighs the impact on our economy? The Minister seems to have made this decision with all too little understanding of its real costs and benefits. The best decisions are generally taken with facts and data, but this one was taken so late in the day that there cannot possibly have been a robust assessment of the reasonableness of the amendment or the impact of the decision on our economy and its businesses. If the Minister will not consult business about the impact of the amendment, I can assure her that we will. In betraying the sensible arguments made to support the business review made not only by herself previously but by Lord Sainsbury and by her boss, the Secretary of State, she has done British business, and all those who work for it, a true disservice.
	Let me turn to the detail of amendment No. 821, which is a blunt instrument that largely replicates part of new clause 1. It asks directors to provide in the business review
	information about persons with whom the company has contractual or other arrangements which are essential to the business of the company.
	Most companies will believe that all aspects of their operations are essential; otherwise, they would not waste money and resources carrying them out. A whole host of arrangements could be deemed essentialfrom suppliers to utility, IT and telephony providers, from leasing arrangements for buildings to agreements with local authorities. Do the Government intend that the amendment be so widely couched? Presumably, it would even include financing from banks or arrangements with auditors or the Inland Revenue that are vital for the company's operation. The term, contractual arrangements, requires clarification. It could even be considered to cover customers. For example, Homebase has its Spend and Save scheme, with 4 million cardholders collectively accounting for 40 per cent. of its sales. That arrangement is clearly essential to Homebase, so would it need to be disclosed in the business review? If so, I do not see howthat would further the aim of the business review, which I understood was intended to put in place, for the first time, a robust corporate social responsibility framework.
	Can the Minister provide some guidance on the type of information that the Government are trying to bring to the surface? Is it names and addresses? Is it length of contracts, assuming that it is the supplier relationship that the Government are driving at? What is intended to be disclosed by directors? How will members judge whether enough has been disclosed? If it is largely environmental information that is required by members so that they can assess whether the company in which they hold shares has behaved ethically, would not that be part of the existing environmental matters narrative?
	Based on what was reported in the papers today and yesterday, it seems that the amendment is aimed at the supplier side of the business, but that is not how it is phrased. That is worrying for business, and for us. Surely important supplier relationships that had an effect on the company's environmental impact, or an effect in relation to the local community, would be included in the environmental matters or social and community issues aspect of the report, so why introduce the amendment at this late stage? The business review as structured already provides a mechanism for catching such important aspects of business operations, but the Government, in tabling the amendment, are casting doubt on that. As a result, they are, at the very last moment, managing to snatch defeat from the jaws of victory.
	The amendment will add costs to companies in terms of compliance and related legal advice and guidance. That is not my assessment, but that of the CBI.

Justine Greening: We cannot support new clause 2, because it would relegate the business review to a tick-box exercise, with the unacceptably high risk that it would be of poor quality.
	Worst of all, the amendment could put some companies at risk, because the information that they are required to disclose, while having no relevance whatsoever to corporate social responsibility reporting, may give out vital commercial information. I am surprised about that, given the example of Huntingdon Life Sciences. Companies working with or supplying that company, and its customers, have been targeted through no fault of their own having carried out perfectly legal operations. Other companies will be worried by the danger in which the amendment puts them. That potentially negative impact cannot be in the interests of the members of the company for whom the report is ultimately intended, nor in the interests of the company's employees. Surely that is not what the Government intend. Leaving aside the atrocious way in which they have introduced the amendment, even worse is how it weakens the business review by detracting from its focus on corporate social responsibility and its main function as a report to the members of the company so that it becomes a much broader report for a much broader audience. Until now, the Minister had always said that that was a dangerous road to take.
	Let me turn to the issues raised by the hon. Member for Hemsworth (Jon Trickett). I fully appreciate what hon. Members are trying to achieve in new clauses 1,2 and 75, but I have some concerns. Widening the purpose of the business review to expand its remit so that it is not only for existing members but for potential investors and customers would weaken, not strengthen, it. The review is designed to be a core narrative on the company, which may include a warts and all assessment by directors in which they consider difficult challenges that lie ahead. Many companies are in industries which, by their nature, have a big impact on the environmentfor example, aircraft operators. Surely the most valuable business review for members will be one in which directors can set out not only their successes but their failures and future challenges regarding corporate social responsibility. It is vital to cover aspects where things are not going well if we are to see an overall improvement in this field.
	The danger of widening the business review's purpose from being a narrative for members to one for potential investors and customers is that it will stop being a narrative and start to become a sales brochure in which, like it or not, positives will be accentuated and negatives may risk being downplayed. Directors may ultimately face a conflict of interest between producing the best business review for their members and the best business review for a broader audience. The review exists to enable members to hold directors to account. It is a powerful tool and we should not weaken it, as amendment No.821 and the new clause risk doing.

Justine Greening: If such a requirement does not help to achieve the Bill's objectiveI do not believe that it doeswe should not include it. As someone who was involved in the audit profession, I know that, in the US, a tick-box mentality prevails and has led to a proscriptive audit approach, whereas the UK's audit approach continues to be based on the substance of transactions, and auditors judging what is true and fair. The latter is a much stronger framework and I believe that we can be satisfied with the UK corporate environment and corporate governance when compared with the position in which US corporate governance has sometimes found itself in recent years.
	Defining who would constitute a potential investor or customer in practical terms is such a broad concept as to be impossible to tie down meaningfully. In the case of a highly diversified company or a company that sells a wide product range, potential investors could have a variety of priorities, which they wanted to highlight in a business review, and a vastly differing range of understanding of the company. Companies with a huge product range could have so many products that almost anyone could be classed as a potential customer. That is unworkable in the context of the business review.
	Perhaps one of the most fundamental changes that the new clause proposes is the requirement for medium-sized companies to complete a full business review. Conservative Members believe that that would be excessively onerous, especially taken with new clause 2 and new clause 75, which deals with reporting standards and auditing the business review.
	The Government estimated that the operating and financial review audit would cost business 33 million. I am concerned that formalising reporting standards, as new clause 2 proposes, and requiring an audit of the business review, as new clause 75 proposes, would risk transforming the business review exercise into nothing more than a tick-box approach, whereby the quality of the substance of the business review took second place to ticking all the boxes of a reporting standard.
	Clause 510 provides that auditors must review whether the directors' report is consistent with the accounts as a whole. The Bill therefore already contains a safeguard to ensure overall consistency. I am sure that hon. Members know that the Accounting Standards Board had prepared a robust reporting standard to use alongside the OFR. Once the OFR was amended and downgraded to a business review, the ASB similarly downgraded the reporting standard to a reporting statement. Nevertheless, it still provides clear best practice guidance to directors and their auditors on the expected content and quality of the report and can therefore provide some quality assurance in the business review narrative.

Justine Greening: I am amazed. There is a touch of irony to a Liberal Democrat saying that I want to have it both ways. In the House of Lords, the Liberal Democrats were happy with the business review, as we discussed in Committee, but by the time the Bill reached the House of Commonsa matter of weeksthey were resolutely claiming that we needed the OFR back. We want an efficient, effective minimum regulation approach to the business review that will enable companies to get on with good quality corporate social responsibility reporting. We do not want to force them down routes that they may not find valuable.
	Surely providing some flexibility is a better approach, especially given that we may debate a climate change Bill shortly, than tying the review down so tightly to lists of requirements for inclusion that there is no flexibility to adapt as the agenda changes and grows.
	Conservative Members want a climate change Bill to be included in the Queen's Speech. We are disappointed that, at this late stage, the Government have changed their mind on a business review about which all key stakeholders had largely agreed. That is representative of a Government that is weak minded, badly organised and listless. We will oppose the Government amendments and new clause 1. We look forward to working with environmental groups and business in the coming months and years on the important matter of corporate social responsibility to ensure that the business review proves successful in establishing a robust corporate social responsibility framework in the UK.
	Many other hon. Members want to participate, so I shall end my remarks.

Michael Meacher: I commend the hon. Member for Putney (Justine Greening) on her opening speech from the Conservative Front Bench. Her initial remarks led me to believe that she would be consensualI was looking forward to more such speechesbut her later remarks made me doubt it. However, we look forward to hearing her arguments in future.
	I support new clauses 1 and 2, which my hon. Friend the Member for Hemsworth (Jon Trickett) moved so eloquently and persuasively. They require companies to produce a business review, which examines the impact of company policies on not only the environment but employees, the local community and suppliers.
	There is a long history to the proposals. It has long been understood that the best way in which to get industry fully to understand and tackle its social and environmental impacts is to require companies to measure and report on them. One cannot manage what one cannot measure. The Government therefore rightly initially drafted legislation in the form of an operating and financial reviewor OFR as everyone fondly knows itand required the leading 1,000 companies to produce one. A dispute then occurred about whether it was right to require those companies to report on their impacts unconditionally or only those that were material to the interests of the company.
	The Government went to extreme lengths to resolve the matter. They set up an external committee to advise them on the definition of materiality. I believe that they did that to get agreement and, after due discussion and considerable delay, agreement was reached and a consensus achieved between the Department of Trade and Industry, the Department for Environment, Food and Rural AffairsI know that because I was thereand the business and investment community. However, last December, the Chancellor suddenly announced at a CBI dinner that he was shelving the OFR legislation. There was no consultation about the abrupt U-turn and the reasons that were given at the time to justify it do not bear examination.
	It was argued that the statutory OFR was a prime example of gold-platingthe normal argument that Whitehall and the CBI useEU legislation. The Chancellor said that it went beyond the requirements of the 2003 accounts modernisation directive. However, the OFR proposals predated the EU legislation by several years. Indeed, the OFR package was amended in 2004, but that was simply to ensure that it complied with the EU directive, not to enable it to go beyond it. Nor was the sudden shelving of the OFR legislation universally welcomed by industry. One had only to look at the  Financial Times during that period to see a letter of protest from the Institute of Directors, no less.
	It is highly relevant that, more recently, top executives from among the 14 largest FTSE companiesthe list reads like a roll-call of the senior ranks of British industryheaded a delegation to the Prime Minister to demand that the Government regulate against climate change. I was delightedif slightly surprisedby that. It showed, in contrast to the rather curmudgeonly remarks of the hon. Member for Putney about the attitude of British business, that those attitudes are beginning to changeand not before time.
	I suspect that that is the reason why the Government are nowin another excellent developmentconsidering producing a climate change Bill in the next Session. I very much welcome that, as someone whoalong with the right hon. Member for Suffolk, Coastal (Mr. Gummer) and the hon. Member for Lewes (Norman Baker)is sponsoring a climate change Bill before Parliament that will require an annual 3 per cent. cut in greenhouse gas emissions in order to achieve what the scientists say is necessary to stabilise climate change, namely a 60 per cent. reduction in those emissions by 2050.
	For the purposes of this debate, the key pointwhich we recognise in our Bill and I hope that the Government will recognise in their climate change Bill if it is forthcomingis that, in order to meet the unquestionably demanding targets, it is necessary to make regular measurements, sector by sector. That includes transportation, industry and the domestic sector. The measurements must also be made on a company-by-company basis. They must ascertain whether the targets are being met and, if they are not, determine what remedial action needs to be taken to get back on track. That is why the business review, as it is set out in the new clauses as a replacement for the lamented OFR, is absolutely essential.

Elliot Morley: My right hon. Friend rightly drew our attention to the excellent points that the Corporate Leaders Group made to the Prime Minister. The Prime Minister has also received a letter from the Aldersgate Group, of which I am a member. The group includes leading businesses that want to promote sustainable development, and to see the establishment of reporting in relation to carbon allowances. Would the Minister for Industry and the Regions like to touch on that letter when she responds to the debate, and tell the House how those reports can be incorporated? That matter certainly seems to be addressed in new clause 1.

Justine Greening: I am slightly perplexed by thehon. Gentleman's comments about being the real Opposition. Will he oppose Government amendments Nos. 821 and 822?

David Howarth: The hon. Gentleman's question, asked from a sedentary position, shows that it is a big issue in the House as to which party is the real Opposition.  [Interruption.] I want to make progress.
	The question is whether the business review that emerged from the row that blew up after the Chancellor removed Government approval for the original OFR goes far enough. That is what new clauses 1, 2 and 75, as well as our amendment (a) to new clause 1, are about. The business review is too narrow in a variety of ways, and the right hon. Member for Oldham, West and Royton mentioned them all. In particular, it covers too few companies for the purposes for which wethink it should be created. It does not cover the supply chain issue, although the Government have rightly introduced a proposal to correct that position.
	Most important for us is the fact that the new business review fails to have proper audit requirements. There is a general requirement of audit, as the hon. Member for Putney mentioned, but what is not contained in the business review, which was contained in the original OFR, is a requirement for auditors to report on matters that come to their attention that are inconsistent with what is in the business review. The wording that we have used in new clause 75 is precisely that which was in the original OFR regulations.
	I suppose that it is fair to say that our starting point, and our reason for supporting new clauses 1, 2 and 75, is perhaps rather different from that of the Government and the Conservative party. We are interested not just in the risks that the company faces, from loss of reputation through to introducing policies that are environmentally unfriendly or socially irresponsible, and unwelcomefrom its point of viewregulatory activity, but in helping to create a market for ethical investment and ethical consumption. That precise point is where we differ from the other parties, because that is our first concern as to what the business review should contain and how it should work.

Colin Burgon: I wish to speak to new clause 2, which completes the circle and complements new clause 1, which was moved by my hon. Friend the Member for Hemsworth (Jon Trickett). Our new clauses combined have the backing of more than 50 Labour Members and I think that I am correct in saying that they have sizeable support among Liberal Democrat and nationalist Members. More importantly, they have the support of the Trade Justice Movement and the Corporate Responsibility Coalition, which, I am told, together represent more than 130 civil society organisations. I pay great tribute to those organisations for the campaign that they held across the country. I do not wish to sound pompous, but I hope that most right-minded members of the British public support the new clauses, too.
	New clause 2 is rather like me and my politics: it is modest, thoughtful and rational. It is linked to this timely Bill, which is the biggest in parliamentary historyit has more than 1,200 clauses and was eight years in the making. The Bill goes a long way towards setting reasonable standards on corporate social responsibility, which the country, the environment and the world desperately need. I sincerely congratulate the Government on their efforts to produce forward-thinking legislation. Some Members, and perhaps some exhausted Clerks and Officers of the House, may question the necessity for further amendments or new clauses to a colossal Bill, so I shall explain why we introduced our new clauses. I always try to keep my contributions brief and incisive, and I shall endeavour to do so today.
	The right hon. Member for Witney (Mr. Cameron) and the hon. Member for Huntingdon (Mr. Djanogly), who spoke on behalf of the Opposition in Standing Committee, have both praised BP's environmental record, so the company provides a relevant case study. BP was praised for taking corporate social responsibility very seriously, but that is qualified by the fact that the company spends a significant amount of money on selling its CSR reputation. That is part of a much wider problem. All too often, companies spend vast sums of money projecting a positive image of themselves as green or ethical organisationsit is obviously not only political parties that do soand do not spend enough money or time on the real issues that we aim to deal with under the Bill. Those are issues of shaping, guiding and ultimately changing the behaviour of the transnational companies whose activities have an extremely serious impact on our environment, climate and communities.
	Hon. Members on both sides of the House regularlyand rightlyvoice concerns about climate change and our environment, and several Members have already alluded to the subject. For many people, that is the central challenge of our times, and that belief is shared by the wider public. To refer to mycase study, in the past financial year, only 5 per cent. of BP's investment went into alternative energy. By comparison, 72 per cent. went into fossil fuels. That puts it only slightly ahead of competitors such as Shell. As one of Shell's shareholders, and as a representative of a party that is going green, the hon. Member for Huntingdon may wish to raise that with BP's directors at an appropriate time.
	Regrettably, BP has been associated with a range of what can only be classed as negative environmental impacts and human rights abuses, from the Baku-Ceyhan pipeline to the Alaskan oil spill. This summer in Texas, the Rev. Jesse Jackson led protests against BP over price-fixing, employment discrimination and health and safety violations, following the Texas City explosion. In fact, BP has one of the worst records for health and safety in the US oil refinery sector. Moving down the continent, in July it settled a court case with a group of Colombian farmers who were forced off their land by paramilitaries so that BP could build a pipeline.
	By way of comparisonI want to be even-handedShell's corporate social responsibility record causes equal consternation. Shell, too, is a big spender on the generation of positive PR, but it is less energetic in making attempts to moderate the negative impact of its commercial activities in the countries and communities in which it operates. For instance, the exposure of Shell workers to toxic pesticides in Brazil has resulted in severe medical problems for the work force. Shell has been forced to take steps to protect workers, but it still will not guarantee treatment for conditions that have developed as a result of that toxic exposure. Its joint venture in Port Arthur emits massive quantities of toxins known to damage human cardiovascular and respiratory systems. Some 80 per cent. of Port Arthur's residents suffer from heart conditions and respiratory problems, whereas the regional rate is 30 per cent. among people who do not live near an oil refinery.
	Those are negative examples from just two companies. They have been sourced and exposed through local legal challenges to the companies in question, and thanks to the endeavours of environmental NGOs. Of course, we cannot make meaningful, objective comparisons between companies such as BP and Shell because neither is forced to report on their activities in a manner that conforms to a level, comprehensive standard that can be easily understood by everyone. That is the crux of my argument. The examples that I have given show how irresponsible behaviour can damage the long-term interests of the company, its customers and shareholders. Companies must understand those factors if they, in turn, are to understand their position and its risks.
	A central plank of the Bill is that, through reporting obligations, shareholders and investors can vote with their wallets and choose not to invest in unethical or environmentally irresponsible companies. Self-evidently, that is worth while only if companies are forced to publish things that they do not want to publish. At present, I understand that there are up to six sets of voluntary reporting guidelines that companies can consult for an indication of what non-financial information to include in their reports. That is exactly why we need a common, mandatory and auditable standard of environmental and social reporting, so that we can cut through the spin and make a judgment on the substance.
	To some extent, what the Bill overlooksand what Her Majesty's Opposition fundamentally misunderstand when they talk about CSR being a unique selling pointis that CSR is what companies do, not what they represent, report or claim to have done. It is not about what they say, but about what they do. New clause 2 would allow customers and shareholders to judge the situation objectively. If it was accepted, it would require reporting standards in business reviews to be set by a relevant body, and compliance with those standards would mean compliance with the requirements of the Bill.
	The lack of a reporting standard is perhaps the most glaring gap in the Bill. The original operating and financial review regulations were accompanied by such a standard, issued by the Accounting Standards Board, to provide companies with guidance on what information they should include. The standard was intended to be a clear template, setting out the types of key performance indicator that could be used by companies to ensure that they complied with the law. The new clause would introduce similar mandatory standards for the business review. That is an issue of major importance for the Corporate Responsibility Coalition, the Trade Justice Movement and the many Labour Members who believe that mandatory guidance is essential to ensure that the information in business reviews is meaningful and comparable across companies, down the years.
	Standards help to reduce businesses' compliance costs, and they have been called for by a number of other stakeholders in the debate, including the Chartered Institute of Management Accountants. Without such a provision, it will be the responsibility of the directors of each company to determine the content of the business review and what indicators to use. That would make it impossible to compare one company with another, or the same company's performance year on year. Shareholders would not be able to assess how their company is performing compared with its competitors, or whether its performance is improving over timeI would have thought that that was self-evident. Without being able to do so, it will be difficult to judge how directors have performed their duties. The absence of reporting standards thus undermines the whole concept of enlightened shareholder value as enshrined in the heart of the Bill.
	It would also be useful for directors to have a clear benchmark and a model to follow, so that they can be confident that they are compliant with the law rather than competing models, which can result in confusion. The new clause, tabled by me and about 50 other Members, allows reasonable latitude in framing the reporting standard, which should address concerns that too strict a reporting standard will place too heavy a burden on businesses and could deter business growthan argument we hear a great deal. As we have seen with other European nations, such as Sweden and Denmark, that is patently not the case. Allowing complete freedom to directors to decide how they report goes too far in a direction that, in my view, is wrong, and undermines the entire concept of reporting and its role in delivering enlightened shareholder value.
	This is an historic opportunity to make a decent Bill better, at a time when the ramifications of its details have never been more important in Britain and, I would argue, throughout the world. I especially commend the new Government amendments on business-supplier relations, which improve the Billthe fact that the Conservatives oppose them means that we must have got something right. I ask my right hon. Friend to re-examine how we might seize the opportunity to consider mandatory standards to the benefit of all interested parties, including the business community. Will she seriously consider, mindful of the Bill as it currently stands, how companies could be encouraged to comply with the suggested voluntary guidance? Statutory standards would, of course, present consequences to companies who fail to adhere to them. Is not a voluntary code by definition rather toothless, unless there is at least some level of supported implementation? Does she actively recommend to companies full compliance with any voluntary guidance? How robust does she expect her outstanding powers of persuasion to be? Furthermore, if, within a set period, companies were seen not to be complying with the voluntary code, would my right hon. Friend set a time frame to reconsider the option of mandatory standards if the law proves to be impotent, in consultation with business and the various NGOs?
	As the excellent little pamphlet from the Trade Justice Moment and Corporate Responsibility Coalition states:
	The Bill provides Parliament with an unmissable opportunity to put in place a legal framework, which ensures that UK companies are fit for the 21st century, combining successful enterprise with ethical and responsible corporate behaviour. But to achieve this, the Bill must be amended further and a bolder approach is needed.
	I wait on the words of the Minister.

Adam Price: And all the angels in heaven rejoice when one sinner repenteth. The fact is that that Bill demonstrates the emerging consensus in society, which is more important than the consensus in this place. That consensus is for greater accountability with regard to corporate power, which, whether we like it or not, is central to the way that we organise ourselvesit is the governing social form.
	On the issue of voluntary codes on corporate social responsibility, the hon. Members for Elmet and for Hemsworth made the point strongly that companies will often give a very good story on CSR. Some consultants are making a very good living out of CSR. But beware the veiland in some cases, unfortunately, the maskof corporate social responsibility. As Andrew Pendleton, senior policy officer of Christian Aid, said:
	Some of those shouting the loudest about their corporate virtues are also among those inflicting continuing damage on communities where they work.
	That is why we need these amendments.
	The concession is welcome because, clearly, there is a problem in the complex world of corporate power, where there are joint venture companies, subsidiary companies and all kinds of complicated relationships. It was therefore important to get the amendment on suppliers and subsidiary companies. We have had particular problems with asbestos-related cases in the past, where companies have tried to avoid accountability through Russian doll-like subsidiary companies across the globe. The underlying message in the amendments is that society predated the joint stock corporation. Those companieswhich were time-limited back thenwere given a licence to operate by society, and we create the conditionsthe legal framework and the transport infrastructurein which they can make their profit.
	It is entirely acceptable to demand what the new clauses demandstatutory minimum environmental and social reporting standards. Companies must be accountable not just to their shareholders and employees, but to the wider society in which they operate.

Alun Michael: Many of my hon. Friends wish to speak, so I shall keep my remarks very brief.
	The speech of my hon. Friend the Member for Hemsworth touched on issues in which I have taken a passionate interest for many years. The only public meeting that I held at the time of the last general election was on the theme Poverty is political, linked to the need to tackle poverty worldwide. I have been involved in fair trade issues for many years, and ministerial experience has taught me a great deal about how to make sustainable development a reality.
	Freedom from ministerial responsibilities allows me to take part in the debate, and to say frankly and openly what I think about the issues. I want a business environment in which the long-term interests of a company include consideration of its responsibility to people and to the environment, but I cannot support new clause 1 because I do not believe that it will have the desired effect. I agree with my hon. Friend about the ends, but great care must be taken with the means.
	My hon. Friend spoke of protecting the public interest and of the need for a light touch. He observed that corporate social responsibility was now taken seriouslyand it is, because the environment has changed. I support the Government amendments because they respond to an aspect of our debates on these issues, but the new clause would introduce a serious bureaucratic burden without achieving the desired results. Surely we should all want the whole of business to be both successful and responsible, and the new environment of enlightened shareholder value encouraged by the Bill will have a major impact in that regard. The balance of success and responsibility is built into the Bill very carefully. In my view, the hon. Member for Cambridge (David Howarth) is wrong: a tick-box mentality is more likely to result in a PR tool than to encourage a positive change in the environment.
	The Bill embodies other important principles, such as Think small first, which has been seven years in the making. The new clause has good intentions, but in practice it embodies the principle Think bureaucratic first. It introduces a dangercompanies will be advised by lawyers and they will play safe, not in protecting sustainable development, but in bureaucratic activity, producing more paperwork rather than public benefit.
	Gibbon has warned us that laws often fail to prevent what they forbid. I suggest that bureaucratic regulation often fails to achieve the desired outcome. There can be perverse, unintended consequences. What enlightened shareholder value does is allow more citizen engagement in how companies operate. Those of us who care about issues such as sustainable development and fair trade, and wish to combat exploitation, surely want an environment in which the citizen campaigner is complemented by the citizen consumer. We can now go into a shop and see half a dozen different fairly traded coffees, which was not the case a few years ago. We also want the citizen shareholder to have an impact. What we want is not a tick-box environment, but intelligent engagement by companies. That is where I agree with the hon. Member for Putney. The Bill retains true and fair as the accountancy standard, for instance, which is extremely important.
	I believe that enlightened shareholder value will allow organisations in the Corporate Responsibility Coalitionthose who want to campaign for trade justice, environmental protection and the restto continue an intelligent engagement with business that has helped to increase responsibility in terms of sustainable development and international accountability in the United Kingdom, while at the same time making the UK a better place in which to do business. Surely there are lessons to be learned from our success in recent years in encouraging small companies to promote entrepreneurship.
	There may be things that companies should do toa greater extent in order to carry out their responsibilities, but some of them should be contained in employment, environment or health and safety legislation rather than a Bill that is concerned with the vehiclethe company. Moreover, there is nothing to prevent companies from reporting in a way that is not required by law if that proves useful to shareholders for reasons of transparency. It would be good for their reputations, demonstrating that they were working responsibly.
	Let us continue the partnership between Government and business and, indeed, the organisations that have campaigned for improvements. Let us think small first. Let us work on the application of enlightened shareholder value, which is making the UK a good and progressive business environment. Let us not go down the heavy-handed bureaucratic route that I fear is being proposed, although not intentionally, in the new clause and amendments.

Lorely Burt: I had the privilege of sitting through the entire Committee stage, and, as a non-legal person, I now know more than I ever really wanted to know about company law. Only yesterday, we were treated to a fascinating discussion on corporate sole.
	Some Conservatives made extremely negative remarks yesterday about the Minister's unhelpfulness in terms of accommodating input from other Members. Although in my view the amount of time allocated to Report could and should have been greater, some shameful remarks were made by Conservative Members who had not had the benefit of experiencing the Committee stage. I find myself in the unusual position of defending a Minister by seeking to put the record straight. The Minister did consult, and she did accommodate helpful suggestions and proposals from Liberal Democrats, Labour Members and those in other parties.
	Even the Minister, however, has been unable to accommodate the wish of both Labour and Opposition Members to retain the operating and financial review. It was certainly not her fault that her boss-to-be, the Chancellor of the Exchequerin a moment of madness, and apparently without consultation with any of his parliamentary colleaguesmade a rash promise last November which he thought would appease big business. I refer to his promise to scrap the OFR.
	The Chancellor thought that he would please business. In fact, he has angered many first-class businesses that had already begun to incorporate the requirements of the OFR in their business reporting. A report in today's  Times estimates that just under 50 per cent. of top UK companies have done so. I cannot agree with the hon. Member for Putney (Justine Greening) that the OFR is a waste of time, and apparently those companies do not agree with her either. Meanwhile, we are left with the somewhat weakened imitation that is the business review.
	New clauses 1 and 75 seek to stiffen the requirements of the review and make it more effective. The hon. Member for Hemsworth (Jon Trickett) made many of the relevant points very eloquently, and I shall not elaborate on them, because we are short of time.
	I am grateful to the Government for giving way on the issue of the supply chain. Any company can purport to be acting ethically, but if a company employs child labour or pollutes the environment, ethical investors and many others will wish to know about it.
	Our amendment to new clause 1 is designed to widen the scope of the review to accommodate ethical investorsthat growing band of individuals who base their investment decisions at least partially on the ethical behaviour of the company. That is hugely important. Clearly, that type of investor cannot make informed decisions if the information is not there; they cannot make them based on pious words or spin. New clause 75 gives auditors the power to check the accuracy of the report and provides for a duty to report any anomalies, specifically with regard to the contents of the business review.
	That requirement will provide two things of great value to companies. First, it will create a level playing field for all companies of the same size. Those that behave in a way that is inconsistent with the spin in the business review will hopefully be found out. Secondly, ethically behaved companies will attract investors who demand reassurance that their profits have not been created at the expense of others, or of the environment.
	What of the cost? When the Chancellor made his fateful statement, wiping the operating and financial review from the expectant statute books, he was clearly seeking to ingratiate himself with business by appearing to be a man keen to reduce regulation and reduce costs. He should know about costs, Mr. Deputy Speaker. British Chambers of Commerce has estimated the cumulative cost to business of implementing new Government regulations since this Government came to power at 50 billion. The cost of implementing these proposals, over and above the existing regulatory impact assessment, is only an additional 30 million. If the Government were to approve an extension to alllarge private companies, the cost would be an additional 144 million. I am sure hon. Members would agree that that amount pales into insignificance in comparison with the huge burden already imposed by the Government.

Austin Mitchell: I shall speak briefly in support of new clauses 1 and 2, but I also want to speak to some other amendments tabled by myself and my hon. Friends. They further the same principle of keeping companies accountable by reportingin other words, by asking them to say what they have done in certain areas. The sort of reporting envisaged in amendments Nos. 801 and 820, which we are proposing, cannot be subject to the usual Tory accusation that while companies spend millions on public relations, telling us what they have done, any expenditure on reporting to tell us what they have done is likely to put people out of work and cause companies to flee to some other jurisdiction. The amendments escape that criticism.
	Amendment No. 801 tackles a basic issue, on which I would have hoped the Department of Trade and Industry would have collaborated with the Inland Revenue and Treasury, as they both want to restrict the use of transfer pricing to launder profits into other jurisdictions either for avoiding tax or for money-laundering purposes. It is an important fact that FTSE 100 companies have 1,500 subsidiaries through which profits can be laundered. Indeed, 60 per cent. of world trade goes through multinationals. Bearing that in mind, something has to be done about transfer pricing and amendment No. 801 actually does it.
	There is considerable concern about this problem in the United States, where several inquiries have been conducted. UNESCO has also had some inquiries. From tax inquiries and congressional hearings in the US, it has emerged that the more flagrant examples of transfer pricing include, for instance, importing plastic buckets from the Czech Republic at $972 each, fence posts from Canada at $1,800 each and a kilo of toilet paper from China at $4,121. That shows how trade is used to launder money out of one jurisdiction into another. Lower prices, going the other way, include prefabricated buildings to Trinidad at $1.20 per building and bulldozers to Venezuela at $387. In that way, tax obligations in one jurisdiction can be avoided and money can be laundered through to another jurisdiction, so it is important that we know what is going on.
	The Treasury and tax authorities are now grappling with the problem. They are already tackling royalty payments by I beg to move, and Vodafone is currently locked in a transfer pricing discussion. We should get companies to declare what transfer pricing policies they are using and to report at constant market prices so that we know what is being done. It is public information and not a great burden on companies. Indeed, Henderson Global Investors, one of the largest institutional investors, has openly called for transfer pricing disclosures so that investors can know where the money is coming from, what is happening to it, where the profits are being generated and where tax has been paid. As I say, it is an important piece of investor information.
	I do not have time to speak to all the amendmentsto the House's great regret, I am surebut I want to deal with another amendment in detail.

Austin Mitchell: The next group will have to be voted on at 3 pm as well, and the principle is exactly the samethe publication of information by companies so that markets and the authorities know what is going on. That applies to amendment No. 820, which deals with the publication of the highest and lowest annual earnings by employees, the number of UK-based workers and the gap between male and female earnings. All the years of pressure to equal up pay and to take action against low pay have not succeeded to the extent that is socially necessary.
	If we require companies to report on what they are doing, it may well prove a way of bringing pressure to bear on them in the face of a glaring scandal. There are massively high pay levels at the top in comparison with exploitation and low wages at the bottom. Between 1997 and 2004, the average FTSE 100 chief executive's total annual pay rose by 80 per cent. to 1.7 million. Pay at the bottom did not increase in anything like the same way, so the gaps are becoming ever more glaring. The only way to deal with the problem is to let people know what is going on and for companies to reporton what they are doing. If companies want their enterprises to be run as a body, co-operating in order to advance the company and achieve greater shareholder value, they should be proud of their pay record and proud of what they are doing to provide incentives for their lowest-paid workers, particularly women.
	Unfortunately, I do not have time to deal with all the amendments in the group, but many of them deal with a growing trend, discernible in America, whereby companies want to report on their achievements. Massive public relations campaigns are taking place and millions of dollars are being spent in America on publishing that information, yet the Conservative Opposition in this country are niggling that any further obligations on companies will bring them crashing down around our ears, sending them into tax havens overseas and causing them to fire large numbers of workers. Those are ridiculous accusations to launch against what amounts to a simple principle of social justice and open governmentthat companies should be open and should be required to publish information, as Government Departments, public authorities and everybody else in our democracy has to. They are part of the fabric of society, and they must maintain their responsibilities to the fabric of society. That is my purpose in highlighting these amendments, and I hope that the Minister will make a difference when she replies to this fascinating debate.

Margaret Hodge: It has been an extremely good debate, and I particularly commend the speeches of my hon. Friend the Member for Hemsworth (Jon Trickett) and the hon. Member for Putney (Justine Greening) and those of my right hon. Friends the Members for Oldham, West and Royton (Mr. Meacher) and for Cardiff, South and Penarth (Alun Michael), who in their ministerial capacities contributed enormously to the agenda. I should also have mentioned my hon. Friend the Member for Elmet (Colin Burgon). Despite my interruptions, it was great to see the hon. Member for Putney contribute from the Front Bench, and I welcome her to her role.
	I want to deal quickly with the issues. Yesterday, we talked about directors' duties under clause 173. Today, we are considering clause 423 and, as I said yesterday, the two clauses go hand in hand and form an integral part of our approach in introducing a framework for corporate social responsibility while promoting business success. I do not want to repeat what I said yesterday, but some Members here today were not here yesterday. I know that many Members have received hundreds of representations on these issues and that there is great public interest in what we are debating.
	It is important to put on record that the purpose of the Bill is to provide a regulatory and legal framework that will promote enterprise and growth and that will encourage investment and employment. As our leading British companies and businesses recognise, businesses will prosper best, will be sustainable for the longer term and will grow faster when they act in an enlightened way. Businesses do not operate in a vacuum; they operate within communities and as part of society. All responsible businesses recognise what they do and how they do it impacts on the community in which they operate and more widely in society. All responsible businesses take account of the economic, social, environmental and human rights implications and impacts of what they achieve. By improving the way in which companies report on their activities and by enhancing the transparency of that reporting, the clause will make it easier for shareholders to hold directors to account.

Margaret Hodge: I am sorry but I will not give way, because time is very short.
	I will deal briefly with new clause 1, new clause 2 and our amendments. New clause 1 was tabled by my hon. Friend the Member for Hemsworth. All companies, except small companies, will have to prepare a business review. Most companies, such as the Virgins and the Asdas, will choose of their own volition to incorporate many of the issues that we are debating when they prepare that review. However, we have exempted large private companies from having to comply with the fifth element of clause 423 for a particular reasonbecause there is a difference between the position of a private company and a public company. A quoted company has dispersed shareholders and operates in a regulated market for its shares, and we believe that that requiresa greater degree of statutory underpinning for transparency and scrutiny than for companies that are privately held. However, all companies, including Thames Water, will have to report with a business review.
	My hon. Friend the Member for Hemsworth raised the issue of materiality, and we think it to wrong to remove what is described as the materiality requirement in the review, as his amendment seeks to do. The provisions were drafted carefully to avoidthe review becoming a box-ticking exercise. The requirements are for the review to be
	a balanced and comprehensive analysis...consistent with the size and complexity of the business
	and for quoted companies to include specific information
	to the extent necessary for an understanding...of the company's business.
	That provides flexibility in the disclosures that need to be made and enables the directors to exercise their judgment as to whether something should be included. When the directors believe information to be material to an understanding of the company's business, we would expect them to include it in the business review.
	I am tight for time, so I wish to deal with issues relating to the Government amendments and then new clause 2. On the Government amendments, I say to the hon. Member for Putney that we have listened to all stakeholders, not just business stakeholders. It was in response to the representations that we had from all stakeholders that we brought forward the amendment to the business review. Of course I will meet, as I always do, the business representatives who may be concerned about this, but our slight amendment just reflects what was in the original company law review.
	I also wish to say something about what has appeared in the press today. It remains the director's judgment to decide what is relevant in the supply chain for them to report on. Nothing is changed by the amendment. It does not require companies to list their suppliers and it is not about miles and miles of paperwork. As clause 423 says, a quoted company will in its business review have regard to the content of the amendment
	to the extent necessary for an understanding of the development, performance or position of the company's business.
	No more, no less. Some of the fears that the hon. Lady mentioned do not reflect what will happen in practice.
	I have a great deal of sympathy for the motivation of my hon. Friend the Member for Elmet in tabling new clause 2. Hon. Members want there to be consistent reporting across companiesI understand thatso that comparisons can be drawn and so that we can see the history of an individual business's reporting against consistent criteria. We have not gone down the road of giving standards a statutory underpinning, because we think that new clause 2 would encourage a box-ticking culture rather than encourage directors to think about the issues on which they are reporting. However, guidance is prepared by the Accounting Standards Board, and it has said that it will update and revise it. I am sure that companies will have regard to that guidance.
	The argument is therefore between voluntary guidance and standards that are recognised in statute. I will closely monitor implementation of the clause in practice to make sure that it leads companies to provide meaningful and useful narrative reporting on issues relevant to the particular company. Specifically, I will ask my officials to conduct an assessment of whether our provisions are working in the way that we hope two years after the implementation of the business review provisions of the Bill. We will consult business, non-governmental organisations and other stakeholders as part of that process, and it will be open to us to return to the issue if the law does not work in the way we intend. We have the power in the Bill to add to the contents of the business review.
	Finally, it is important to say to those who have been pressing for more movement on the review now that I have seen the corporate social responsibility agenda develop over time. Provisions that are controversial today but are adopted by some, become widespread tomorrow. It is an evolving agenda as there is greater acceptance of the wider responsibilities of a company. I believe that companies will change and that their role in the community will change. It is on that basis that I ask hon. Members not to press their new clauses and amendments.

Jon Trickett: In the light of the Minister's comments, and particularly in the light of the supply chain amendment, I beg to ask leave to withdraw the motion.
	 Motion and clause, by leave, withdrawn.
	 It being Three o'clock, Mr. Deputy Speaker,  pursuant to Order, [17 October], put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.

Jonathan Djanogly: The hon. Gentleman pre-empts me because I have some way to go before I get on to amendment No. 383. The amendment was proposed by an outside body as an alternative suggestion. I thought that it was worth tabling the amendment so that we could hear the Minister's response to it, given that it is a sensible suggestion. However, it does not tally with our approach in the new clauses, which I will support.
	I thank the Institute of Chartered Secretaries and Administrators for the action that it is taking on boiler rooms. The institute recently announced that it had produced a warning notice to be used by companies to raise awareness of boiler rooms. The notice can be distributed to shareholders with other mailings or via websites. We feel that that is a positive move against operators of boiler rooms.
	We need to appreciate that many, if not most, of the companies affected by the problem are far from large companies such as GSK. They are usually small family businesses for which a civil injunction costing thousands of pounds against illegality or terror would often be unaffordable. More to the point, such companies are saying, Is it not for the Government to defend us against terrorist activity, rather than our having to pay for an injunction?
	Where do shareholders fit into all this? I have tried to explain that the debate is multifaceted and highly interconnected. Activists will often look for weak pointsthe points at which with the minimum number of people they can inflict the maximum damage, be that to property, people or the company's economic prospects. Many companies will fold under such a concerted and multi-directional attack, but some companies that believe in what they are doing and refuse to be scared by intimidation will trade oncompanies such as HLS and Montpelier, the company that is building the Oxford laboratories. In both those cases, the crisis was sparked by terrorists attacking the companies' shareholders via the register of members. At that point, HLS, unable to survive as a company registered in this country because of the hate mail and death threats being sent to its shareholders, repatriated itself to Maryland, USA, and relisted on the US NASDAQ exchange. Why Maryland? Because in that state only holders of 5 per cent. or more of a company's shares have to be disclosed, and then only to other shareholders. We are not advocating that approach for the United Kingdom, but the case does show what will happen if we do not get on top of the problem: other companies will leave the country.
	To amplify the importance of the issue, let us examine the case of Montpelier in Oxford. The company bravely resisted the attacks of the terrorists, but finally stopped work when its shareholders started to be threatened and attacked. As a relatively small listed company, its share price was directly affected by that activity, so a direct link could be made between access to a register of members and impending disaster for the company. Roughly the same tactics were used in the terrorist attack on GSK shareholders as in the HLS and Montpelier cases. The letters to GSK shareholders stated:
	The only way to hold GlaxoSmithKline to it's PROMISE
	not to use HLS
	is to target it's financial vulnerability. We are therefore giving you this opportunity to sell your shares in GlaxoSmithKline. If you have any doubts over the effectiveness of this action then keep a close eye on the GSK share price and watch it plummet.
	If we do not get on top of this problem, we will see many more Huntingdon Life Sciencesmany more companies repatriating. We can have whatever tax regime we like; if a company's shareholders are going to be attacked physically, the company will be forced to consider moving. To put the pharmaceutical sector alone into perspective, it contributes more than6.5 billion a year to Britain's GDP and 12 billion in exports, and employs 80,000 people directly and 250,000 indirectly. The issue is a serious one for this country.
	I have attempted to explain the need to protect shareholders' details, so how should we now proceed? My first point is that, as things stand, a coach and horses can be driven through the Bill's provisions. That is because, in addition to the current register of members being accessible, copies of the register of members as at the return date need to be filed annually with the annual return, which is a publicly accessible document. In Committee in the Lords, Ministers said that they would consider introducing regulations to change that requirement, but why not simply add the relevant provisions to the Bill? We tabled an amendment for that purpose, which we hope to move whenor ifwe reach part 25, which deals with annual returns, in the latter part of tomorrow.
	Since that time, there has been Government confusion on the issue. In Committee, the Minister for Industry and the Regions suggested that our proposal on annual returns was too restrictive, but the Secretary of State has said that he intends to use regulations to ensure that a company need only supply details of shareholdings of 5 per cent. or more in its annual return. I shall be grateful if the Solicitor-General makes clear the Government's intentions.
	The formula chosen by the Government is for the company to initiate an application to the court if it objects to a request to see the register. One problem that we have identified is that, although it may be possible for a large company to instruct lawyersprobably solicitors and barristersto take the matter to court within five days to comply with the Bill's provisions, although it would probably be pushed to do so, it would be unrealistic to expect a smaller company to keep to such a tight and inconvenient timetable. That is why we tabled amendment No. 384, which would increase from five days to 15 the period in which a request that a person be deemed unsuitable to receive the register must be made.
	In Committee, the Minister's response was that a company of any size should be aware of a suspect application straight away, and that if company directors were given too long, there would be a risk of abuse on the part of the company. However, in its brief of 2 October, the Confederation of British Industry stated that it did not regard an extension of the period as an invitation to abuse the application process, but as an opportunity for companies to consider whether requests were for a proper purpose or not, to take advice, and to respond appropriately. We continue to support the CBI's view, and that is another reason why we tabled amendment No. 384.
	The Government intend to provide that people have to identify the purpose for which the information is to be used. We tabled a probing amendment in Committee stating that that information should be precise. For example, what if the reason given is that the applicant wants to inform shareholders of an important matter for themselves, the company, humanity, or the environment without stating that he or she intends to ask shareholders to sell their shares as a protest? As hon. Members can see, this could be a complicated matter. In Committee, the Minister did not accept that our proposed amendment would add much to the definition of proper purpose, but we think that it would be helpful if the Government at least issued some guidance.
	A further approach, which we see as being complementary to the Government's approach, is to provide companies and individuals with the right to apply to the court to close the register if the availability of the register creates, or is likely to create, a serious risk that a member of the company or connected parties will be subject to violence or intimidation. In other words, not all companies would be thrown into the same basket. Some companies or individuals may be at such risk or under such pressure that they should be treated on a stand-alone basis. The provisions could be tacked on to the existing provisions as a further level of protection, which might be more realistic, more accessible and certainly cheaper for smaller companies that need protection.
	Furthermore, the existing clause works only for a company to seek protection in respect of all its members. It does not provide for an individual member to seek to protect his or her details. We therefore tabled new clause 17 to allow for that. The theme of individual rights to allow people to protect themselves, rather than relying on the company to seek protection for them, has also been taken up by the CBI. Our final amendment, No. 383, as I mentioned earlier, was proposed by the CBI for that purpose.
	The amendment is complementary to the issue of directors' home addresses and allows for the home address of a registered shareholder in a listed company or a company traded on a regulated market not to be disclosed if the shareholder does not wish it. In short, the shareholder has a legal right to require that his home address be omitted from the register of members which the company may be asked to supply to a third party, and from the public register of shareholders maintained at Companies House. In the past, the Government have told us that that is unnecessary because shareholders can use nominees. In practice, many smaller shareholders will not do that, so we see the CBI's point.
	In Committee the Liberal Democrats provided a further option, which we thought was worthy of consideration. Their amendment provided for a company, by members' resolution, to stop inspections of the register of members, on the basis that it agrees to pass on lawful communications. Although we thought that was a step too far in terms of restricting access to the register, we can see the importance of the second strand of the Liberal Democrat amendment. If the register is closed, the company must take on the responsibility of passing on communications. We therefore tabled new clause 16, reflecting our joint proposal.
	The Minister dismissed our comments on this point in Committee as very wide ranging. She was concerned that we were restricting long-held principles on public access to the register of members. That is not the case. All we are doing is allowing a court in extremis to protect the small minority of companies whose details are highly sensitive, for whatever reason. That would never be an everyday occurrence and a court decision to close the register would be taken only on a company by company basis and, I imagine, very carefully.
	Amendment No. 683 tabled by the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) deals with initial shareholders. I believe that is covered by the Bill as drafted, although the Minister may wish to elaborate on the point. With reference to amendment No. 358, the register is a register of legal owners. We have supported the concept of giving rights, votes and information in particular to beneficial owners of shares. We were delighted to see the Government move on the matter. However, we see no reason to change the underlying nature of ownership split between legal and beneficial owners. I look forward to hearing the Minister's views.

Paul Farrelly: I shall speak briefly against new clauses 16 and 17 and amendment No. 383. We spent six or seven weeks in Committee discussing the matter at great length, so I shall not repeat all the arguments against. Essentially, they have to do with regulation, law enforcement and the shareholder protection regime in the UK. However, I shall have to repeat some of the arguments, as the Conservatives clearly have not listened. I shall pay a compliment to the hon. Member for Cambridge (David Howarth). The Liberal Democrats tabled similar amendments in Committee and it is to their credit that they have not advanced them again on the Floor of the House.
	As I said in my intervention, I understand the constituency interest of the hon. Member for Huntingdon (Mr. Djanogly), arising from the position of Huntingdon Life Sciences, but with respect to animal rights terrorists, by advancing those new clauses, he is using a sledgehammer to crack a few nuts.
	We had a similar situation at a guinea pig farm in Staffordshire where the animal rights terrorists went as far as exhuming a body and kidnapping the bones, and they also occur elsewhere in the country. But the police have not been beating a path to my door saying that a clause such as this is essential to help them to prosecute the perpetrators. More fundamentally and importantly, investors, the Association of British Insurers, the British pension funds, City banks and the stock exchange are also not clamouring for clauses such as this in the Companies Act because they are aware of the wider consequences for shareholder protection and company regulation.
	The reason for that is that new clauses 16 and 17 are drawn extremely widely. Amendment No. 383 institutes an absolute right to shareholder secrecy, and I note the comments of the hon. Member for Huntingdon on my intervention that he will not put that to a vote later. Like him, I do not take that amendment very seriously, but even the new clauses are drawn extremely widely. The test is that the company has to show that its members or their families run the risk of being subject to violence and intimidation.
	In Committee, I gave an example from my days as an investigative journalist when I pursued a bank director in Russia whom I considered to be a dodgy stockbroker. He was pursuing various deals in Moscow, which in those days during liberalisation was the equivalent of the wild east. Because he had a grudge against a number of other people whom he came up against in negotiations, he let it be known that one particular director of a Dutch bank was the blocking point to a big deal with Gazprom. The Dutch bank director's house in Moscow was subsequently set on fire when his family was in it.
	In such circumstances, a major bank might come to the Secretary of State and say that it operates in Russia or in a lawless country and that there is a severe danger that if the identities and addresses of not only their employees but their shareholders are disclosed, they may be subject to the risk of violence and intimidation. The companies that are most difficult to regulate and enforce laws against, and funnily enough that are most regularly involved in fraud, are the very same companies that operate offshore. They are usually small companies, operating in dangerous environments. To institute a right on their behalf of secrecy of membership would make regulation and shareholder protection much more difficult.

David Howarth: The hon. Member for Huntingdon (Mr. Djanogly) has described the circumstances which have given rise to new clauses 16 and 17. I agree with other hon. Members who have spoken that amendment No. 383 is far too draconian, which is why I cannot see any hon. Member supporting it. The issue therefore concerns new clause 16, which is a serious proposition that responds to the debate in Committee by combining the various proposals.
	I freely admit to the House that the proposals that we put to the Committee were not perfect, by any means, and we listened to that debate carefully. The question is whether this composited new clause deals with the objections that were raised in Committee and again today. On the whole, I think that it does.
	The key question is how far to go in a direction that the Government have already agreed on. Clauses 117 and 118 go a long way towards protecting shareholders in the circumstances of violence and intimidation that have been described. The hon. Member for Newcastle-under-Lyme (Paul Farrelly), who has made several important contributions to the debate, exaggerates rather when he says that this extra bit of protection is a fundamental threat, but the existing clauses are not. In fact, the distance between what the Government propose and what the new clause proposes is very small.

David Howarth: I thank the right hon. and learned Gentleman for his comment. That is a significant problem with the way in which clause 117 is draftednamely, in terms of purposes. As he says, it is often difficult for courts to have access to the purposes of individuals. Subsection (4) makes use of that concept when it refers to
	requests made for a similar purpose.
	It is difficult to get access to people's minds to find out whether their purpose is similar.
	The other problem is that clause 117(4) says that the court
	may direct that the company is not to comply with any such request.
	That means that the company could be subject to continued harassment in the courts whereby people could make a new request saying that it is not for similar purposes and is therefore not such a request. Even if the court had made an order underclause 117(4), the company, especially in the case of a small business or a business without much in the way of resources, could come under great pressure from organised campaigners working on behalf of people whose purposes were probably nefarious. There is therefore a problem with the protection that clause 117(4) provides. That leads to the question of what other protection might be offered in such circumstances.

Elfyn Llwyd: I appreciate that the hon. Gentleman is an expert in law and I am sure that that applies to company law, too. However, he describes circumstances in which someone was intent on taking a matter to court time after time to try to break through. Would not the court take the view that that constituted vexatious litigation and would not such persons be ruled out?

David Howarth: That is true. One cannot declare whole classes of people to be vexatious, only specific individuals.
	The hon. Member for Newcastle-under-Lyme claimed that the new clause was too widely drawn. That is a serious accusation against it. However, I believe that it is narrowly drawn. It would provide that the Secretary of State had to find a specific set of facts to do with violence and intimidation before being allowed to close the register. If the Secretary of State failed to do that properly, there would be a possibility of judicial review. That is not the full system of independent review that the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) mentioned, nevertheless it is an important safeguard.
	Let me outline what makes the new clause much narrower than the proposal that was made in Committee and therefore acceptable. First, it would provide for the Secretary of State to prescribe circumstances in which, despite the closure of the register, information could be given out. That is an important difference between the proposal that was made in Committee and the new clause. As I said earlier, it deals with the problem of investigative authorities, perhaps even investigative journalists, being locked out of proper investigations.
	Secondly, the new clause includes an important element of our original proposal. The closure of the register should not prevent people from getting legitimate, lawful information to shareholders. The purpose is to prevent the violent intimidation of shareholders, not stop information getting to them. We proposed that a company that wished to invoke the new procedure should undertake, at a reasonable fee, to direct to its shareholders any information sent to it for them. The new clause maintains the right balance. Often, there are legitimate campaigns, even in industrial relations, and it is important that people get information to shareholders, perhaps over directors' heads. An important point about openness and transparency was made in Committee. The new clause preserves at least the essence of the proposal that was made in Committee.

Douglas Hogg: I shall confine myself to new clauses 16 and 17, and largely to new clause 16. I acknowledge that my hon. Friend the Member for Huntingdon (Mr. Djanogly) has a serious point and is right to put forward the new clause. In its present form, it is not satisfactory and needs adjustment, but I understand and agree with the general motive that lies behind it. The Government are right that clause 117 goes some way to address the problem, and they are to be congratulated for having put it into the Bill. There are at least three problems with clause 117, however, which cause me to think that an additional provision, along the lines of that put forward by my hon. Friend, is necessary.
	The first problem with clause 117 is the proving of motive. Motive is often difficult to prove. In this instance, it is likely to be particularly difficult to prove and the courts may therefore be unable to determine what it is. A second, and quite different, problem is that even when it is possible to have an idea of the motive, it may not be so easy to show that it is not a proper motive. That takes me to my third point: what is a proper motive, or an improper motive? I can understand why the Government have not sought to define proper purpose, but the phrase is pretty opaque, and an opaque phrase is not likely to be a terribly valuable safeguard.
	Clause 117 is directed primarily at motive, while new clause 16 is directed primarily at consequence. They are not the same. A person may have a perfectly proper motive for finding out addresses, but if those addresses fell into the hands of a third party who was not so properly motivated, that might well constitute a serious risk. There is not the necessary overlap between clause 117, which is directed at motive, and new clause 16, which is directed at consequenceas, indeed, is new clause 17.
	I think that there is room for something similar to what my hon. Friend the Member for Rutland and Melton has suggested in the new clauses, but I cannot support him all the way. I agree with the hon. Member for Great Grimsby (Mr. Mitchell) about the desirability of transparency and openness, and I well understand what was said by the hon. Member for Newcastle-under-Lyme (Paul Farrelly) about investigative journalism. Those points are well founded.
	I suggest something along these lines. First, along with the test of riskand I have no particular objection to the Secretary of State exercising that powerthere should be a test of proportionality and of public interest, which should apply in the first-instance test, the application to the Secretary of State. Secondly, there should be some mechanism, over and above judicial review, whereby the Secretary of State's decision could be reviewed in a court.
	Let me make two points about that. First, the test of proportionality and public interest should be a test to which the appellate tribunal should be specifically directed. Secondly, the right to make an application to the appellate court should be open to third parties who feel aggrieved by it, such as the press. There is a precedent of a kind. As you will doubtless know, Madam Deputy Speaker, judges in criminal courts can make orders restricting the publicity given to parties to the proceedings. In those circumstances, third parties have a right to apply to the court for a change in the order. I have something rather similar in mind. If a third party felt that the order was unduly restrictive, that third partyalthough not party to the application to the Secretary of Statewould have the right to lodge an appeal.
	Finally, I would enlarge the subsection dealing with prescribed circumstances to include classes of person and organisation. Circumstances is a fairly narrowly defined word. I should like the definition to be widened so that the information could be given to persons and organisations specified by the Secretary of State and/or the court on appeal.
	I think that there is a great deal of force in what my hon. Friend the Member for Huntingdon has said, but I am unhappy with the new clause as currently drafted. If my hon. Friend puts it to the vote I shall support it, but I shall do so on the basis that it will be amended in the other place along the lines that I have taken the liberty of describing.

Elfyn Llwyd: Having listened carefully to all the arguments, I think that this has been a very interesting debate of the highest calibre. I hope that my few remarks will not detract from that quality.
	I see the point of clause 117, and I see a great deal of merit in what the Government have done. I also commend what was said by the hon. Member for Great Grimsby (Mr. Mitchell). There is a balance to be drawn. On the one hand, there is the legitimate right of the public to know who the registered shareholders are. That relates to the veil of corporate liability that forms part of the history of company law. All that is fine and rightly understood, and we are all in favour of making everything as translucent and transparent as possible. The other side of the balance, as the Government recognise, is that we live in dangerous times. There are legitimate companies carrying out their business, yet their people are being threatened for no good reason.
	I fully acknowledge what the hon. Member for Newcastle-under-Lyme (Paul Farrelly) and the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) said about investigative journalism. What they said is very important.

Mike O'Brien: What I am saying is that, under clause 117, the court can enableorder, in facta company not to provide information requested during a particular request. So the company will be in a position to make such order as it believes is appropriate when an application is made. The court would then be able to deal with concerns about shareholder democracy and other issues, which might properly be raised by shareholders. But there is nothing in new clauses 16 and 17 that would enable that to occur.
	New clause 16 would also have unwarranted side-effects. Entry in the register of members is evidence of a member's entitlement. That would be lost for any company with a confidentiality order. The loss of the ability to check the register would create a risk that registers of private companies with confidentiality orders would not be properly maintained.

Douglas Hogg: Let me explain the point that I am trying to put to the Solicitor-General. There is a difference, and no necessary overlap, between not having a proper motivethat covers is motiveand consequences. I think that one could get evil consequences in terms of risk, even if the application was made for a proper motive. So I think that the two tests should perhaps be incorporated into clause 117.

Mike O'Brien: I note what the right hon. and learned Gentleman says.
	Amendment No. 383 would give every shareholder of a quoted or publicly traded company the right for their home address not be publicly available either through the company or Companies House. That is simply not necessary. There is no requirement for the home address of any member of any company to be publicly available anywhere. All that clause 113 requires is
	the names and addresses of the members.
	That is the same as the current requirement insection 352 of the Companies Act 1985. The Bill makes it clear elsewhere that an address for service, such as a PO box, is all that is required. We are talking about something for the purpose of communicating with the member and a way in which the member can be easily contacted. That is the objective of the exercise. In any event, a large and increasing proportion of individual investors in quoted companies and publicly traded companies hold their shareholdings through nominees so their names and addresses do not appear in the register at all.

Mike O'Brien: After much complaining by the Conservatives that there was inadequate time to deal with the Bill, we managed to finish business early yesterday. We did not need all the time that was allowed under the programme motion. The Conservatives complain a lot about the time available, but when they are offered time they do not seem to use it very well. However, we should not let the debate degenerate. It has been a good debate. I want to focus on the real issues.
	On boiler room scams, which were mentioned by the hon. Member for Huntingdon (Mr. Djanogly),under Government legislation introduced on 1 May 1999 and replaced on 11 December 2003 by the Privacy and Electronic Communications (EC Directive) Regulations 2003, it is unlawful to make unsolicited direct marketing calls to any individual who is registered with the telephone preference service. That is a whole lot easier than applying for an individual member's confidentiality order as suggested in the amendment. The Bill provides that a court may relieve a company from the obligation to allow access to its register if the court is satisfied that the access is not sought for a proper purpose. We consider that that strikes a balance between, on the one hand, protecting members from attempts to harass or defraud them, and, on the other hand, the right of the public and members to know who owns a company and to contact them. New clauses 16 and 17 would destroy that balance.
	As for amendment No. 384, there was a debate on this issue in Committee, so I shall be brief. Fifteen days is too long a period to allow in all cases where a company is considering a request for access to the register. Let us suppose that a shareholder is trying to contact other members about a resolution that has already been tabled for a general meeting that has been calledparticularly an extraordinary general meeting on 14 days' notice. In such a case, giving the company 15 days to process the request enables the management to frustrate the shareholder's purposes without even having to justify themselves in court. Moreover, the difficulties of assessing requests for access can be overstated. At the risk of generalising, I suspect that the assessment process will rarely involve detailed research or analysis. A request will either look suspect, or it will not. In our view, five daysremember, that is five working dayswill be enough.
	Amendment No. 758 addresses a rather different topic. It proposes that companies' registers of members should include details of not just the registered members, notably the legal owners of shares in companies limited by shares, but the holders of any underlying economic interests in the company that may stand behind its registered members. In other words, it would lead to a register not just of legal entitlements, but any related beneficial interests. I must tell my hon. Friend the Member for Great Grimsby (Mr. Mitchell) that we would not be prepared to accept such a huge change at this stage. It would represent a huge change not only in company law, but to the way in which all sorts of perfectly legitimate businesses are run.
	If one thinks about what the amendment would mean in practical terms, it soon becomes clear that however desirable it might be in certain circumstances as a matter of principle, it would have undesirable consequences in other cases. It would also probably fail to achieve many of its objectives, even if it did not simply prove to be unworkable. The first question is how on earth one would enforce a universal requirement to disclose beneficial interests in companies. A company will generally be unaware of the identity, or even existence, of those who hold such interests. Even the registered member may not have all the information if he is only the first link in a chain of intermediaries between the company and those with the underlying economic interest in its shares. If the requirement is unenforceable, it is likely that any criminal elements that might benefit from the limitations of the existing system will also be able to find a way round the proposed new system.
	An equal worry is that compliance with the proposed new system would impose hugely increased costs on investors, companies and the financial services sector because of the capturing and processing of all the additional information required, without, I regret to say, delivering any benefits commensurate with those costs. If I give a single example of which my hon. Friend might not have thought that is taken from an everyday situation, it might illustrate the complexities involved.
	People who live in flats often have a share in the company that owns the flats. They also often have mortgages, and it is common for the lender to be in a position to require the resident of a flat's share to be transferred to the lender. That gives the lender a beneficial interest in the share. The amendment would require the register to identify the lender's beneficial interest and to update that information every time the resident switched to a different lender, as often happens, or whenever the lender was taken over by another institution, which also often happens. None of that would serve any especially useful purpose. Okay, we could deal with that problem by way of a further amendment to exclude such situations, but the example shows us the sort of unforeseen consequences that might arise from the amendment.
	Finally, it is worth pointing out that there are already powerful statutory mechanisms, at least for public companies, that enable companies to get to the bottom of who might be behind their registered members. These will shortly be supplemented by further measures under the transparency obligations directive. When such mechanisms are used, there is provision for records to be kept of the beneficial owners whose interests have been identified and for those records to be disclosed.
	My hon. Friend also spoke to amendment No. 683. Clauses 10 and 11 contain powers that enable the Secretary of State to prescribe in regulations made under the Bill the types of identity information that must be provided in the statements that are to be included in the application for registration, which are the statement of capital and initial shareholding that is required when a company is to be formed as limited by shares and the statement of guarantee that is required when a company is to be formed as limited by guarantee. Given those circumstances, I think that the amendment is unnecessary, because we will achieve the result that my hon. Friend wants, albeit by a different route. We are not especially attracted by the particular wording of the amendment, although I appreciate that that could be altered. However, I hope that my hon. Friend will accept that we achieve the result that he wants through the route already provided for, rather than by using the route that he proposes.
	Government amendment No. 222 is a minor amendment that will clarify the Bill. I do not think that it will give rise to any controversy, but I will be happy to answer questions on it if necessary.

Jonathan Djanogly: We have had full debate on this group of amendments, and unfortunately time is now short. The Solicitor-General mentioned the programming. I have just had a quick look and can advise him that under the timetable we have so far been unable to discuss even half of the groups of amendments tabled by the Government. He referred to finishing early last night, but failed to mentioned that one and a half hours had been provided for debate on a single group of amendments.
	The hon. Member for Great Grimsby (Mr. Mitchell) says that we should support openness, transparency and access to registers. I do not disagree with any of that; however, in certain exceptional circumstances there will be a need to restrict access, and that need is not currently catered for.
	The hon. Member for Newcastle-under-Lyme (Paul Farrelly) repeated many of the arguments that we heard in Committee. He has acted as a good sounding board and we have learned from many of his comments, especially those in support of investigative journalism.
	I thank my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg) for his constructive remarks. We shall consider what he has said today as the legislation progresses.
	To summarise, we believe that there will be circumstances in which companies and individuals should be able to ask for protection. The Secretary of State is mentioned in the new clause, but if the Government took a constructive approach, we could consider providing for a court process. Companies and individuals should be able to receive protection. That is why we shall press new clause 16 to a Division.

Question accordingly negatived.
	 Question, That amendments Nos. 209, 254, 210 to 212, 161, 222, 305, 223 and 306 be made,  put andagreed to.

James Brokenshire: Let me first declare my interest in the business under discussion. Although I am a non-practising solicitor, before entering this House, I advised on company law for some 14 years. I therefore draw hon. Members' attention to the entries appearing by my name in the Register of Members' Interests.
	I should also like to put on record that this is the first time that I have had the opportunity to address the House from the Front Bench. It is an honour and a privilege to be able to debate several key aspects of this very important Bill on behalf of Her Majesty's Opposition. My only regret is that the timetabling means that we do not have as much time as we would like to debate some of the issues.
	The amendments relate to parts 12 and 13 and the continuing position of company secretaries within the corporate environment. Before speaking to our amendments, I want to say how much we welcome the about-turn that the Government have made on this issue. The amendments tabled by the Government give proper statutory recognition to company secretaries in private companies. Conservative Members have argued steadfastly that the company secretary provides a crucial role in ensuring good corporate governance and legal compliance, as well as fulfilling several important administrative tasks within the company. Secretaries are also officers of the company with the legal liabilities that that brings with it, and have a recognised ability to sign documents on behalf of the company.
	Until now, the Government have said that there is no need to recognise private company secretaries in the Bill. While they implemented greater flexibility on the need for private companies to have a secretary, they argued quite forcefully that there was no need to keep any records of such persons if the secretary was appointed by a private company, or for third parties to have any automatic ability to check whether somebody was a company secretary. The Government said that if the secretary was appointed and there was a need for such a secretary to sign documents on behalf of the company, they would have to be appointed as an authorised signatory under part 13. During our debate in Standing Committee, the Solicitor-General did not appear to have any concerns about the approach that was being taken, telling me:
	Private companies should have a greater degree of freedom and choice. We believe that that will not lead to any significant problems and that this deregulatory approach is the better one.[ Official Report, Standing Committee D, 27 June 2006;c. 264.]
	The problems of implementation and the effect of the Government's proposals have forced them to revise their whole stance. The Institute of Chartered Secretaries and Administrators set out the position well, saying:
	For any of the 2 million private companies which find their secretary useful, and want to continue employing such a person, there will be the confusing burden of having set up appropriate authorisations to try and mimic the current statutory powers that are well understood.

Mike O'Brien: I welcome the hon. Member for Hornchurch (James Brokenshire) to the Front Bench. However, in the amendment, he confuses the whole subject of private companies and tries to introduce new criteria. He should trust private companies to make the decisionswe do not need the nanny state to interfere. The amendment shows the Conservatives trying to impose more regulation on companies when it is not needed. We should reject it.
	 Amendment negatived.
	 It being half-past Five o'clock, Mr. Deputy Speaker,  pursuant to Order, [17 October], put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.
	 Question, That amendments Nos. 771 to 773, 366, 261 to 264, 367, 776, 368, 304, 441, 369, 370, 728, 729, 373, 731 to 734, 207, 723 to 726, 347, 727 be made, that new clause 7 be brought up, read the First and Second time, and added to the Bill and that amendmentsNos. 474 to 476, 510, 477, 478, 511, 479, 512, 513, 145 to 150, 208 and 151 be made,  put and agreed to

Margaret Hodge: I agree with almost all that the right hon. Gentleman says. I would not put contributions by individuals to political parties on the same level as contributions by individuals to charities, but the continuation of healthy political parties is an essential feature of the democratic expression of the political views of all in our community. On the whole, therefore, I agree with the thrust of his remarks.
	Our new clause will prevent companies from circumventing the controls of the Bill. If they wish to donate to the political fund of a trade union, they must seek shareholder authorisation. If they donate to trade union funding in another wayssuch as providing free meeting room facilitiesthey will not need to seek authorisation. In the latter case, there is no danger of such funds being redirected to political parties, because the Trade Union and Labour Relations (Consolidation) Act 1992 prevents trade unions from making payments to political parties, except through their political fund. That Act also prohibits trade unions from redirecting money received from third parties into the political fund unless the money is given as a contribution to the political fund. I want to underline the fact that we are not aware of any companies making such donations to trade unions as a means of circumventing the requirements applicable to political donations in this way. However, I have taken on board the request of both Opposition parties that we should make that clear in the Bill to ensure that it is not a possibility in the future.
	New clauses 81 and 82 and amendments Nos. 708 to 710 address an issue that was raised by the hon. Member for Huntingdon (Mr. Djanogly) in Committee. Under clause 376, the directors of a subsidiary company and the directors of its relevant holding company may be liable if an unauthorised donation is made by a subsidiary. Clause 377 recognises the possibility that neither the holding company nor the subsidiary may bring an action against the directors who are liable in respect of the unauthorised donation. It therefore allows shareholders to bring legal proceedings to enforce that liability. In such cases, we agree that shareholders of both the subsidiary and the holding company should be able to bring those proceedings. That is particularly important if the directors of the holding company are effectively the shareholders of the subsidiaryfor example, if it were a wholly owned subsidiary.
	As drafted, the clause would allow only shareholders of the subsidiary to bring proceedings, even against directors of the holding company. As I have explained, we do not think that that would work in practice, and these amendments address the problem by giving the right to bring proceedings to shareholders of the subsidiary and shareholders of the holding company. That will ensure that the directors of the holding company can be held to account by their shareholders if they use subsidiaries that they control to make unauthorised donations.
	I wonder whether you, Mr. Deputy Speaker, might advise me on the rest of my contribution, which is about resisting other proposals in the group. Should I deal with those now or wait for them to be spoken to and come back?

David Howarth: I shall speak mainly to new clause 76 on corporate expenditure on lobbying. We do not know the exact extent of corporate lobbying in the UK, but we can get some idea of it from the fact that expenditures on public affairs have risen rapidly over the past 20 or 30 years. In the 1980s and 1990s, leading agencies were growing at between 20 and 40 per cent. a year, and according to a study done in 2000 by Miller and Dinan, in the last two decades of the 20th century, expenditure on public relations rose thirty-onefold.
	We do not know exactly how much of that expenditure was directed at lobbying Government on Government relations, as it is called, but as Miller and Dinan point out in their study, it is hardly a coincidence that that massive growth in expenditure coincided with the era of massive privatisations and deregulation of the financial services industry. Lobbying is now a very big business.
	The services offered by Government relations companies are extensive. A particular companyI have checked its websitegives these examples of its work: changing Government policy on payouts to Railtrack shareholders, changing telecommunications policy, defending the interests of companies involved in the private finance initiative, winning political approval for a takeover bid and getting changes in the Financial Services and Markets Bill.
	Whatever one thinks about those issues, one way or the other, one thing about them that cannot be doubted is that they are political. Corporate lobbying is an intervention in the political process, just as much as, and in some ways more than, giving money to a political party or a political campaign, yet the law controlling corporate political activity, which is in the Bill, covers only activity connected with elections or referendums.
	Lobbying is not just about issues that concern individual companies; it reaches the most important issues. During the past few weeks, there has been some controversy about the activities of certain oil companiesExxonMobil in particular, and its alleged funding of climate change denial. That is an attempt to shift public policy in a way that favours the short-term interest of a company at the expense of everyone in the world.
	The growth of lobbying over the last generation brings into question the type of democracy we are. Sometimes, even when discussing the Bill, the Government, and even the Opposition, have given the impression that the purpose of Government is not to put forward and defend a certain view of the public interest, but is instead merely to navigate a path between clashing special interests. Earlier today, the Minister said something to the Conservative Opposition that I think implied that she feels that this is a problem in relation to how parts of the Bill have been handledwe have spent too much time working through what various lobby groups are saying and not enough on what we ourselves think.
	Lobbying is creating a form of corporatism in which rich and powerful bodies reinforce their power and wealth by seizing control of the access to Government and excluding others. As the membership of political parties falls, and as in many parties the influence of members on the policies of those parties has declined, the space left behind in the political system has been occupied by corporate lobbyists. The result is that politics is becoming a closed circle.
	In addition, lobbying is economically harmful. Most of the massive expenditures made on Government relations are aimed simply at redistributing wealth, usually from the poor to the rich. The aim is not to increase the productive capacity of the company or the country, but simply to shift wealth from one group to another. It is, in the jargon of economists, an example of non-productive rent-seeking. The resources devoted to lobbying would, in economic terms, be much better spent on developing new products, and on selling and marketing. Resources devoted to lobbying are, in economic terms, mainly waste.
	We must do something to bring lobbying under control. New clause 76 is only the start of our thinking about that process. Frankly, I do not expect it to be added to the Bill tonight, but I hope that it will be the start of an important debate. The new clause would oblige companies to report on their expenditure on lobbying, once it exceeded a certain limit set by the Secretary of State, and to obtain shareholder approval for lobbying expenditure above that limit, in a way that is equivalent to the regime that applies to political donations.
	In Standing Committee, there were various objections to our proposal. One was that companies would have to report trivial expenses, such as the cost of a cup of coffee with a Minister or a taxi to Parliament. We dealt with that in the new clause by allowing the Secretary of State to set a minimum limit. The objection was made that the measure would inhibit the flow of information from companies to the Government, or Parliament. To deal with that, we have given the Secretary of State power to exempt expenditure on meeting governmental or parliamentary requests for information. Outside the Committee, it was suggested that there was a gap in our proposal, because it did not deal with overseas companies operating in this country, and we plugged that gap by making it clear that it does apply to them. Such companies already have to register and report their activities.
	The object of new clause 76 is to bring more transparency to the world of lobbying, but it is of help to shareholders, too. As the Minister said, one of the reasons that political donations need shareholder approval is that directors' political enthusiasms can adversely affect a company's reputation. The same is potentially true of lobbying. One might expect shareholders to be more in favour of lobbying in their company's interests than in favour of political donations, but they, too, might wonder whether managerial effort would be better spent on promoting and developing the company's products than on lobbying Government. They, too, might wonder about the effects on a company's reputation if it was found to have lobbied in a way that was enormously unpopularfor example, on the subject of climate change. The topic is important and, if the opportunity arises, I should like to press my new clause to a Division. I realise that its chances of success are slim, if Standing Committee was anything to go by, but I hope that it will be the start of a serious debate.
	I shall not press our other amendment in the group, amendment No. 687, to a Division. It is a drafting amendment, but an important one, and I hope that the Government understand the point behind it. It would amend clause 372, which is about the circumstances in which a company may make a political donation. Under the clause, a company must obtain a resolution of members. Subsection (3) is about what happens in a wholly owned subsidiary company but, obviously, in such companies, it is pointless to require a resolution of the shareholders separately from a resolution of the parent company, because they are one and the same thing. Clause 372(3) aims to prevent the requirement for two resolutions if one of them is pointless. Unfortunately, the wording of the provision it is not entirely clear:
	No resolution is required on the part of a company that is a wholly-owned subsidiary
	before it can make a donation. There therefore appears to be an enormous loophole, and one need do to avoid making a resolution in the form required by the law is set up a wholly owned subsidiary. I hope that that is not the intention and amendment No. 687 aims to put into legislation what we all believe should be the case.
	I conclude by thanking the Minister for closing the loophole on trade union political funds that we brought to her attention in Committee. I accept that it is unlikely that that loophole has been used, but it could be used in future, so I welcome the fact that the Government have taken the opportunity to close it.

James Brokenshire: I wish to look at the treatment of trade unions in the Bill. At the end of our debate in Committee, the relevant provision said that unions were not political organisations which, as we all know, is a legal fiction. The recent document published by the Trade Union and Labour Party Liaison Organisation on party funding made it clear that
	unions are an inseparable part of the Labour party.
	Union votes account for a third of the votes for the next Labour leader. The unions make Labour party policy through the national policy forum, and they exercise a 50 per cent. block vote on policy motions debated at the Labour party conference. How best should we address the political position of trade unions in the Bill? As the Minister said, the Government clearly listened to the debate in Committee, particularly the points made by Conservative Members, and have moved the debate forward by tabling Government new clause 83. Under subsection (1), a company does not have to submit to the approvals process prescribed in the Bill if a donation, other than a contribution to a union's political fund, is made to a trade union. Financial support from companies for trade unions to facilitate training, educational development, employee counselling and other important aspects of unions' work to promote good employment relations in the workplace would fall outside the approval requirements. That is of particular concern to many companiesindeed, that concern largely drove the inclusion of clause 372 at the outset.
	Subsection (2) makes it clear that the qualificationI have termed it a legal fictionthat a union is not a political organisation applies only in connection with political expenditure in clause 371. In other words, a company can promote or publicise a trade union's activities without the need to seek shareholder consent. That is entirely appropriate in the context of fostering positive employee relations and ensuring that employees have access to advice and guidance in the event of a dispute or a safety issue. It is worth putting on the record the fact that trade unions' political activities are framed by the Trade Union and Labour Relations (Consolidation) Act 1992, which incorporates provisions on the establishment and maintenance of the political fund and the uses to which the fund can be applied. Section 72 makes provision for the contribution of funds to political parties, as well as the distribution of materials relating to the promotion of political parties or candidates. The political fund can be used by the union only for political purposes, but I expressed anxiety about it in Committee, and I remain slightly concerned about the proposal on displacement. If a company made a donation to a trade union for non-political purposes, could it be used to free up, displace or transfer resources to the political fund for a political application? We debated the issue in Committee, and the hon. Member for Burnley (Kitty Ussher) highlighted advice from the TUC on actions taken by a union that could endanger its independence for the purposes of the 1992 Act.
	The Minister kindly wrote to me on 24 July 2006, enclosing a copy of the briefing note, for which I am grateful. It would be helpful, however, if the Minister were to respond to the following points when she sums up. First, has she obtained legal advice confirming that a transfer of funds from an employer to a union, which either displaces or frees up other resources in the general fund, which are then transferred to the political fund, would be a breach of the independence requirements of the 1992 Act, as per the advice given by the TUC in its briefing note? Secondly, does she construe the wording in new clause 83,
	other than a contribution to the union's political fund,
	to encompass direct and indirect contributions, where the purpose of the contribution was clear or where it might not be clear from the contribution that it was so intended but it had that effect indirectly?
	Amendment Nos. 376 and 377 develop a slightly different pointthe equivalence between the treatment of companies and trade unions in terms of the approval process for sanctioning political donations or expenditure. Under clause 371, companies are required to pass a shareholder resolution at least every four years. Under the 1992 Act, however, political fund ballots are only required every 10 years. The Government have argued clearly that there is a need to ensure, in the context of companies, that protections are afforded to shareholders in relation to the use of company funds for political purposes. Similar arguments also apply to trade unions. In the consultation document, Review of the Employment Relations Act 1999, the Government responded to calls for a review of the requirement for political fund ballots:
	The Government understands the case for reform. However, these ballots serve an important democratic function and ensure that union members can at regular intervals collectively authorise their union's involvement in political activities.
	In that context, the purpose behind each of the constructs seems to have a broad equivalence. If a company is required to seek shareholder approval every four years, surely it is appropriate for a trade union to be treated in the same way. The Bill cannot, by its nature, amend the underlying trade union legislation, so the amendments seek to highlight that important point in the context of company donations only. Back in 1994this was reflected in the Labour party's manifestothe Prime Minister said in an interview with  The Independent:
	In my view trade unions are an important part of our democracybut fairness, not favours, is the way we are going to run things.
	Fairness is what we are seeking in the amendments, and I hope that the Minister will consider that.
	With regard to new clause 76 tabled by the Liberal Democrats, I recognise the concern about lobbying expressed by the hon. Member for Cambridge (David Howarth), and we debated in Committee whether undue influence is a factor. To resolve the matter by putting restrictions on the company seems particularly harsh, however, given that some lobbying informs political debates, as Members on both sides of the House would recognise. Obviously, if the issue relates to political expenditure and attempts to change or to influence the way that people vote, it would be caught by the existing provisions relating to political expenditure in the Bill.

James Brokenshire: My right hon. Friend makes a powerful point. Lobbying does instruct, and can inform, the way in which we govern. To assume that all of it is bad is a very simplistic approach. To be fair to the hon. Member for Cambridge, I do not think he was suggesting that, but his new clause highlights the difficulties of trying to legislate in this way.
	I welcome the opportunity that we have had to debate the issues, but I consider this to be the start of a process that will require much more detailed consideration. We need to think about the impact of lobbying. We need to think about whether it is a good thing, which elements are bad and which may require reflection.
	There are a number of technical amendments to this part of the Bill. I have some sympathy with amendment No. 687, which attempts to make clear thatclause 372(3) does not obviate the need for the holding company of a wholly owned United Kingdom subsidiary to produce an appropriate political resolution. Although this is a technical and a drafting matter, I think it worth putting on record, and I hope that the Minister will consider it.
	New clause 81 provides further clarification of enforcement rights in connection with holding companies and their subsidiaries. That was discussed in Committee, and I am pleased that the Minister has had time to reflect and table an amendment.
	There have been some significant improvements in this part of the Bill since the Committee stage, and I welcome what the Government have done. We have a limited opportunity to provide for some broad equivalents in the context of trade unions, but a fuller and more formal debate may be required for that purpose.

James Brokenshire: My point was about newclause 83(1), which includes the words
	other than a contribution to the union's political fund.
	It may be a legal expression, but I am seeking to clarify what happens according to whether the contribution is direct or indirect. The Minister may want to take further advice. I am raising a technical point, on which I would like some clarification. I accept that we may not obtain it this evening, but any further assistance would be helpful.

Margaret Hodge: The advice that I am getting is what I thought myselfthat there cannot be an indirect donation.
	The point about trade union ballots on political funds was inappropriate in this context. I was very careful earlier not to raise an issue that would have been far more relevant to this evening's debateConstituency Campaigning Services, of Coleshill Manor, an organisation which appears to act as a Tory party front in the west midlands. Some say that the company is separate from the Conservative party, but the current Conservative leader believes that it is directly linked. Anyone who delves into the organisation can see that it is very closely linked. In debating the provisions on political donations, it would have been more appropriate for the hon. Member for Hornchurch to have reflected on whether there was proper transparency in respect of Conservative party funding, rather than head-banging and having another go at the link between the Labour party and the trade unions, of which we are extremely proud.
	We had a long debate in Committee on lobbying, and I think that the hon. Member for Cambridge (David Howarth) and I simply differ on this one. I disagree with him on his definition of political lobbying, because lobbying in the interests of a company on an issue that may, in future, be decided by politicians is a very different matter from other types of lobbying. Such lobbying is utterly legitimate and utterly invaluable to any member of the Government and in no way should we attempt to intervene. I said in Committee and I say again that my decisions as a Minister are much better informed when I have listened to all the interest groupsas indeed we have in the process of devising the Bill's clausesthan they would be if I took advice only from my civil servants, for whom I have huge regard for their endless work on the Bill, but who nevertheless come with the limited view of working within the civil service. I believe that we have to accept that situation.
	The hon. Gentleman made a wholly proper point, which I accept, about it being much easier for richer individuals and richer companies to lobby, but I am not sure that there is an easy answer to it. No doubt the hon. Gentleman would deal with the problem by finding mechanisms for equalising the voice of people in what I referred to in Committee as the political marketplace of interests. I believe that trade associations and other such organisations are hugely important in giving voice to smaller, less endowed companies.
	In the end, we have to have faith in our own judgment that we can make an objective appraisal after lobbying from all sides. Indeed, we spent quite a lot of time this afternoon debating issues surrounding narrative reporting, about which we have been massively lobbied by business interests with differing views on a range of matters concerned with the environment and corporate social responsibility. In the end, we have to reach a balanced view and make a judgment on it. I am sorry that the hon. Gentleman and I disagree. We have already had the debate twice and no doubt we will have it again, but I believe that lobbying has a very important part to play in a vibrant, good democratic structure. We should look into ways of increasing the voice of people less able to fund that themselves, and we should nurture and value lobbying generally.
	We have considered amendment No. 687 carefully and whether the drafting change to clause 372 that the hon. Gentleman proposes would make the meaning of the clause clearer. That is an issue for the lawyers and they have concluded that it would not. Subsection (3) clearly states that a resolution of members of a wholly owned subsidiary is not required, but a resolution of the members of its holding company is. I am, however, grateful to the hon. Gentleman for making the suggestion and lawyers will no doubt continue arguing about it.
	I forgot to move amendment No. 647 at the beginning of my remarks and it would remove

Mr. Deputy Speaker: Order. The right hon. Lady does not have to move the amendment. We will come to it in the course of our proceedings. She only moves the lead item in the group.

Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government new clause 14 Computation of periods of notice etc: clear day rule.
	Government amendment No. 643
	Amendment No. 682, in clause 291, page 137, line 1, at end insert
	'(3A) Directors of the company shall be ineligible to cast any proxy votes.'.
	Government amendment No. 301
	Amendment No. 355, in clause 307, page 142, line 23 , at end insert
	'( ) Nothing in this Chapter affects a provision of a company's articles which provides for a resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting, or at a meeting of any class of members of the company, at which he was present (whether such resolution consists of one instrument executed by or on behalf of each such member or of several instruments in the like form each executed by or on behalf of one or more such members) to be as effectual as if it had been passed at a general meeting, or at a meeting of any class of members of the company, duly convened and held. A resolution in writing passed in accordance with such a provision of the company's articles shall be treated as if it were a written resolution for the purposes of this Chapter.'.
	Government amendments Nos. 443, 302, 348and 349.
	Amendment No. 418, in clause 316, page 146, line 2, at end insert 'and
	(d) be communicated directly to the member either in electronic form or in hard copy form'.
	Government amendment No. 444
	Amendment No. 419, in clause 327, page 149, line 30 , at end insert
	'(1A) The chairman must demand a poll when he is aware that the outcome would be different from that reached on a show of hands.'.
	Amendment No. 420, in page 149, line 30, at end insert
	'(1A) The chairman must announce the number of proxy votes in favour and against each resolution, before such a resolution is put to a vote of members in general meeting.'.
	Government amendment No. 445
	Amendment No. 421, in page 158, line 13, leave out Clauses 349 to 352.
	Government amendments Nos. 446 and 350.

Jonathan Djanogly: As the Minister implied, we are considering something of a hotch-potch of new provisions to finish off the day. Just in case we end up with a problem with time, I shall start by speaking to amendment No. 355, which we believe to be the most important element of the group.
	Amendment No. 355 originated from the Law Society. It would enable a company to make provision in its articles on the passing of unanimous written resolutions that were not subject to the procedures laid down in chapter 2 of part 14. The provisions in chapter 2 are less flexible than those in section 381C of the Companies Act 1985, which permits a company's articles to make provision for written resolutions to be passed pursuant to the articles as an alternative to following the statutory procedure. The amendment would preserve that flexibility when the written resolution is agreed unanimously by members. That reflects a principle of common law, as expounded in the case of re Duomatic, 1969, which hon. Members will remember was mentioned in Committee.
	Such flexibility was incorporated in clause D18 in the White Paper of March 2005. Subsection (2) provided:
	This section does not affect any power of a company to make provision in its articles for its members to pass resolutions without a meeting other than in accordance with this Chapter.
	We think that the flexibility needs to be retained, but only for written resolutions that are passed unanimously. We do not consider that clause 288(3) achieves that flexibility.
	Such flexibility is needed for not only private companies, but public companies that cannot avail themselves of the statutory written resolution procedure that exists in the Bill. It is not uncommon for newly incorporated public companies to pass written resolutions pursuant to a provision of their articles, and if that ceased to be possible it would create extra work and cost.
	Two examples come to mind in relation to the provision. First, following the formation of a public company, it is common to adopt new articles. That can be done by a written resolution pursuant to regulation 53 of table A when that is incorporated in the articles of a company on its formation. Secondly, when a public company is a wholly owned subsidiary of another company, it is common to pass written resolutions in accordance with the outcomes. However, the Bill does not allow that practice to continue. The consequence will be that a resolution of a public company will require a meeting of members in all circumstances. That would involve additional expense, but it would give no benefit in the circumstances that I have mentioned.
	We welcome Government amendment No. 301 and new clause 13. We tabled amendments to clause 294 in Committee and my hon. Friend the Member for Hornchurch (James Brokenshire) expressed his justifiable concerns about the effect of the clause as drafted. It allowed that if a person was not entitled to vote, but did so, and if the articles of association of that company provided a mechanism for objecting to an improper vote, and if an objection was made and rejected, or if no objection was made in the relevant time period, the unauthorised voter would be deemed to have been entitled to vote. My hon. Friend stated that that would unfairly prejudice shareholders who could not challenge a decision that was irrational, unreasonable or even unlawful. The Government amendments return us to the existing common-law position. If the result of a poll is declared, a court should now be able to question it, rather than having no power to change it. That is sensible and to be welcomed.
	New clause 14 is the Government's welcome response to amendments that we tabled in Committee. Currently, companies insert into their articles a provision that when giving a notice period for meetings, no account will be taken of the day of sending of the notice, or the following day, or the date of the meeting itself. However, that can be drafted as two extra days or three extra days, which can cause confusion. In the worst instances, circulars have been sent out illegally to members, causing great embarrassment to all concerned. The point might be slightly technical and one that only practitioners and company secretaries will be happy to see made, but we thank the Government for reconsidering that grey area, which we highlighted, tabling new clause 14 and thus providing clarity to all concerned.
	In amendment No. 682, the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) suggests that directors should be ineligible to cast proxy votes. I would look forward to hearing his reasons were he here to state them, but he is not. However, most proxy forms give power of proxy to the chairman or such other person as the shareholder nominates. No one is forcing shareholders to support the chairman in order to cast their vote; it is simply convenient for many shareholders. For that reason, we cannot support the amendment. The amendment stands in the name of the hon. Member for Great Grimsby (Mr. Mitchell) as well, so perhaps he will speak to it in due course.
	Amendments Nos. 348 and 349 would reserve the original position in the Bill, such that an AGM of a public company will be capable of being called on short notice where all shareholders consent. That will make public company AGMsmainly where there is a handful of shareholdersprovide the formality that shareholders normally require. It is a deregulatory measure and, as such, we support it.
	The purpose of amendment No. 418 is to clarify how a company should notify its members of the publication on a website of the notice of the meeting. Clause 316 makes provision in that respect, and subsection (2) states that the company has a duty to notify its members of the existence of the notice on its website, but it is not made clear how such notification is to be given. We agree with the Law Society that it is important that companies notify their members directly when they have published a notice. How that should be effected requires clarification. We would be concerned if it was sufficient merely to put the notice of the meeting on the website.
	Amendment No. 419 is a probing amendment that we received from the Investment Management Association. In a previous debate, it was said that now is not the time to be proposing probing amendments, but I am sure that the Minister will forgive us on this occasion, given the nature of the Bill and the way in which everything seems to be crammed in at the last minute.
	Under regulation 46 of table A to the Companies (Tables A to F) Regulations 1985, a resolution voted on at a company meeting is decided on a show of handsone vote per member for each shareholder actually present or represented in the case or a corporate shareholder, but not proxies unless the articles so provideunless a poll is called. Common law clarified the chairman's duty to
	ascertain the true sense of the meeting.
	If the chairman as proxy is aware that if a poll was called the outcome would be different from that reached on a show of hands, he has a duty to demand a poll, if he is able to do so under the company's articles of association. Guidance from the Institute of Chartered Secretaries and Administrators re-emphasises that duty.
	We were therefore concerned to learn that at the AGM in July of GoshawK Insurance Holdings, the reinsurer, an advisory resolution on the remuneration of the chairman was decided on a show of hands when a poll would have defeated it. We understand that GoshawK's lawyers had advised that, because votes on remuneration are advisory and not binding on the companythat is certainly the case in relation to the combined codethe chairman was not obliged to call a poll. It is considered important by the Investment Management Association that the law in this area is clarified, and the Bill is an opportunity to do that. It would be helpful if the Minister set out the Government's position in that regard.
	Amendment No. 420 deals with the related issue of votes at general meetings. On the question whether a chairman should be forced to call a poll, transparency would be a key issue. To that end, the amendment suggests that the chairman announce the number of proxy votes before the resolution is put, rather than after the resolution is put, as is usually the case with listed companies. In that way, members will know to call a poll in the usual way. Such transparency would make the IMA amendment unnecessary. The provision may be more suited to the compliant code for listed companies, but I shall be interested to hear the Minister's views and whether she will look into the matter in more detail.
	Finally, on amendment No. 421, which would remove clauses 349 to 352, the CBI's updated view is rather blunt. It believes that the provisions dealing with independent reports on a poll are
	excessive and unnecessary and will place increased burdens and costs on companies
	and that they are
	contrary to the Government's aim for deregulation and the principles of better regulation.
	We debated the matter in Committee and it has been debated in another place. The Government have still not got the position right.
	The debate relates to clauses 349 and 350, which provide a mechanism for shareholders representing not less than 5 per cent. of the voting capital of a quoted company to demand an independent report on any poll taken or to be taken at a general meeting of the company. The request must be made no later than within one week of the poll being taken, and the directors must appoint an independent assessor within one week of the requirement to prepare a report for the company on the poll or polls.
	The Institute of Directors said of the arrangements:
	These provisions are onerous and unnecessary. The Government has provided no evidence of any abuse it is trying to redress. They will place increased costs and burdens on companies for no discernable gain. In addition, in spite of the statement that an adverse report on a poll will not affect the validity of a decision, it is likely that companies would delay the implementation of the decision until the time for a challenge has expired. In the case of decisions taken at EGMs this could have a seriously detrimental effect on companies' ability to complete major transactions and would undermine the competitiveness of UK companies.
	The procedure of calling for an independent report would be open to serious abuse from those who were opposed to a transaction, but knew that they would be defeated on a poll. They would hope to achieve their desired aim by the back door rather than through the legitimate democratic process of the poll.
	That was a quote from the IOD, and earlier I quoted the CBI, so there we have the views of a section of the business community. The provisions highlight some of the strong feelings that exist, and we believe that the Government could address those concerns in a more significant way than they have done to date.
	One of the points that has been raised is the impact of the delay. It has been pointed out to us that companies may seek to wait a week before implementing a change, for fear that a demand for some sort of report may be required. If that were the case, it would impose a considerable cost and burden on companies. In that regard, we could have a situation where companies are making a share offering and the longer that the share offering waits to be completed, the more the company may be required to pay in subscription costs or placement charges to agents or underwriters. That could increase the costs associated with companies' placement of new shares, which is not desirable.
	Even if we do not take that point of view, there is another issue. What will be the sanction if a report is received that is unfavourable and says that something has not been done appropriately? As we have already discussed, the chairman's ruling in relation to a particular matter is fairly conclusive, in much the same way as Mr. Speaker's decision is conclusive. If a report is called for, there may be some further delay to enable it to be undertaken. If a report is called for after the general meeting has taken place, it may be difficult for the expert who has been appointed to provide the report to assess it and conclude whether matters were conducted appropriately.
	I have mentioned several issues in relation to these provisions and I would be grateful if the Minister would address them.

Margaret Hodge: If they are not used, the objection to them will never become reality, but they remain a tool that could be used. The hon. Gentleman should accept the existence of this mechanism, which will ensure that the conduct of directors in pursuing issues is above board and in order. If it is not, shareholders can employ the mechanism, should they so desire, to ensure that they are properly dealt with. We have put this measure in place to ensure much better shareholder engagement in the processes of a company undertaking its business. I am rather surprised that Conservative Members feel that they have to come back to this time and again and at the final hurdle say, Actually, we do not think this provision is going to be used at all, so why are you putting it into the Bill? That is a rather weak argument against a measure that will ensure that shareholders have the rights that we wish them to have in engaging in a proper way. If those rights are ever challenged, they can take advantage of the provisions in this part of the Bill. I ask hon. Members to reject amendment No. 421.
	The Government new clauses and amendments would deliver greater transparency, enhance shareholder engagement and ensure the realisation of the corporate governance objectives that we all support. If we want to encourage more shareholders to exercise their vote, we need to empower them with the necessary tools so that their vote counts.
	I therefore urge hon. Members to accept the Government new clauses and amendments and reject the others.
	 Question put and agreed to.
	 Clause read a Second time, and added to the Bill.
	 It being Seven o'clock, Mr. Speaker,  pursuant to Order [17 October], put forthwith the Questions necessary for the disposal of business to be concluded at that hour.
	 Question, That new clause 14 be brought up, read the First and Second time, and added to the Bill, and that Government amendments Nos. 643 and 301 be made,  put and agreed to.
	 Amendment proposed: No. 355, in clause 307, page 142, line 23 , at end insert
	'( ) Nothing in this Chapter affects a provision of a company's articles which provides for a resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting, or at a meeting of any class of members of the company, at which he was present (whether such resolution consists of one instrument executed by or on behalf of each such member or of several instruments in the like form each executed by or on behalf of one or more such members) to be as effectual as if it had been passed at a general meeting, or at a meeting of any class of members of the company, duly convened and held. A resolution in writing passed in accordance with such a provision of the company's articles shall be treated as if it were a written resolution for the purposes of this Chapter.'. [Mr. Djanogly.]

Jim Cunningham: I thank you, Mr. Speaker, for granting this Adjournment debate, which is not only appreciated by Labour Members but, I am sure, by the workers at Peugeot.
	This is the second Adjournment debate that we have had on this matter, as there are really two issues. There is the general issue of manufacturing in the west midlands, and I am sure that some of my colleagues know exactly what I am talking about. Not too long ago, there was the Rover issue. More locally, the Standard motor car company has been an issue over the years. Then we had problems with Jaguar about 18 months ago.
	With regard to Peugeot, some months ago, we heard the announcement that it would close its plant next summer. Last week, however, it was announced that the plant will close in January. If we look at that company's record, we see that it has played ducks and drakes with the labour force and, to a certain extent, one could argue, with the Government at times. Over the past two years, I know that Ministers have had great difficulty in getting answers from the company about its long-term plans in relation to the Coventry plant in particular.
	There is therefore nothing new about the way that the company does it business, but I thought that it was brutal, callous and, to say the least, totally insensitive, to announce that the workers at Peugeot will lose their jobs just after Christmas. Someonenot me, but a former Prime Ministeronce said that that was one of the unacceptable faces of capitalism, which sums the position up adequately.
	I want to raise one or two issues. First, publicity has suggested that Peugeot originally bought the site for 1. Were any inducements or sweeteners used on that occasion? The Minister might not be able to answer that tonight, but I would be grateful if she would look into it. Secondly, what amount of grants, not just nationally but on a European level, have been paid to the company over the years? What conditions were attached to those grants? Those are important points.
	The reason that the company has given for its recent announcement is that a quarter of the labour force have left. By that logic, three quarters remain who want to keep their jobs. We also know that it is a profitable company, so it is a strange logic.
	Another aspect of the company's argument that has changedagain, one cannot rely on anything that it saysis that it had proposals for eastern Europe. We have now found out that it has cut back on those proposals. It has also announced redundancies in France and Spain. The evidence suggests that the company has been secretive over the past three or four years and, at worst, that it has played ducks and drakes with the labour force, not only in this country but in Europe.
	I want to thank my right hon. Friend the Minister for visiting Coventry some weeks ago. She discussed with us how we could start to replace some of the industries that we are losing, certainly in the Coventry area. I am sure that my hon. Friend the Member for Coventry, North-West (Mr. Robinson) will agree that the meeting was useful. She banged heads together and got some movement on the new medical technological park that will be located at Ansty.
	We want to thank the Minister for something else. We made representations to her about employment, which, as I am sure she knows, is a complex issue, certainly in Coventry. We were very concerned about Jaguar, and about what would happen if assisted area status was withdrawn. The Whitley site employs 3,000 or 4,000 people, and there are proposals for further developments. We raised the issue of the Peugeot site itself, and also the way in which Rolls-Royce might be affected. I am pleased to say that we secured some positive movement, which many people, especially the trade unions, will appreciate.
	What is also appreciated is that, when the story broke, the Chancellor of the Exchequer offered us a quick meeting, along with the unions. The unions' problem at the time was that they could not persuade representatives of the company to sit down and talk about alternative proposals. As a result of the Chancellor's intervention we got talks going, although they did not work out in the way that we wanted.
	We have had major debates about the west midlands economy. There have been indications that Ministers are considering a new industrial strategy for the west midlands. As I said earlier, they are enthusiastic about the new medical and technological park. While on the one hand we are losing jobs, on the other there are some positive signs. Nevertheless, we see it as our job to put pressure on Ministers to ensure that manufacturing jobs start to be replaced. According to various reports, there is a drift to the service industries in the west midlands. We want to see a halt to that, and more of a balance.
	There are pockets of social deprivation in some parts of the west midlands. Not everything is rosy. Some good things are happening, but training and skills are needed to end that social deprivation. I know that the Government are investing in those. The west midlands is famous for research and development. The Chancellor has made extra money available, but we must keep up the momentum. The more research and development money we can put into the universities of the west midlands, the better.
	I am sure the Minister knows that we have taken a great interest in RAF Cosford. Welsh Members have been lobbying hard, but we think we have much more to offer in the west midlands. We have a number of first-class universities, and a good many skills. We want to retain those skills at Cosford and we also know that the creation of a further 2,000 or 3,000 manufacturing jobs is a possibility. All in all there are some positive signs, but we must not be complacent. We must continue to push as hard as we can.
	Thank you very much for granting me this debate, Mr. Speaker. I hope that the Minister will respond to the points I have made, some of which are very serious. I am sure that it will help those affected in Coventry if she can provide some answersalthough we cannot help them completely, because they will have a very bad Christmas: they are going to lose their jobs.

Geoffrey Robinson: I echo the thanks of my hon. Friend the Member for Coventry, South (Mr. Cunningham)whom we all congratulateto you, Mr. Speaker, for your kindness in granting us this debate. The presence of a good-sized group of distinguished hon. Friends from the region shows that, although the issue has been around for a long time, it is still of intense and topical interest to us all. We look forward to hearing from my right hon. Friend the Minister shortly. We are also pleased to see our hon. and learned Friend the Member for North Warwickshire (Mr. O'Brien), the Solicitor-General, whoapart from his ministerial responsibilities in the Cabinetshares our local interest. As a Minister and as a Member of Parliament, he has always taken a particular interest in employment matters in the area.
	My hon. Friend the Member for Coventry, South dealt with the issue very fully. He described the company's behaviour as brutal, callous and insensitive, and I have to say that, unfortunately, that is how it is viewed by most employees at the plantor, at least, those who are still there.
	It is particularly apposite that the Minister is replying tonight, as she knows from her recent visits to Coventry some of the problems that we face, as well as some of the great opportunities that we are seeking to seize. In other words, we are not being negative about the matter, though there are important points about Peugeot to be made. As a city, an area and a region, we are seeking to forge ahead and it is appropriate to tell the Minister how well she has done in bringing a new impetus to the development of the Ansty site in Coventry.
	I wish to raise two specific points that arise from my what my hon. Friend the Member for Coventry, South said. First, there is the matter of the 5 million that the company alleges that it has put into the relief of hardship cause after its decisiona decision that came out of the blue and contradicted many previous undertakings. The availability of the 5 million became one of the great hopes of people involved. I am not sure that the Minister can answer this eveningwhat she says will be transmitted to the company in any eventbut people need to know whether it is real money or whether it is amounts just to the 20,000 man-hours claimed today to be at the disposal of employees by way of advice. If the latter, it is a scam and it is silly of the company to pretend in this way. It devalues its undertakings and, frankly, shows the company to be precisely what it is: insincere and unreal. It would have been far better not to have made the remark and not to have given the undertaking in the first place. We seek clarification on that point. It is not too late: the company could still make some contribution of real money, which would be appropriate in many deserving cases that could be identified.
	My second point relates to the sudden announcement that the closure date is being brought forward from July next year to December this year. The unfortunate incidence of the timing has already been highlighted. It seems to me to reflect once again the insensitivity of the company. Many trade unions and employees have told me that they made plans to stay until July next year on the very clear understanding that they had a firm, legally binding commitment from the company to continue their employment up to that date. I do not know the details, have not seen any paperwork and do not know what undertakingsverbal or otherwisewere given. The unfortunate employees, however, now feel that they have been treated unjustifiably, unfairly and contrary to every undertaking that the company had given. I cannot comment further, but I put those two specific points to the Minister and look forward to her transmitting them. If she cannot answer tonight, I hope that in due course the company will hear and reply.
	My last point is a more general one for the Minister to consider. In this age of global competition, a company can sometimes buy land or other assets in advantageous circumstances at a knock-down priceLongbridge is a good example in many waysor it can be given grants or inducements to take on a particular set of circumstances, as my hon. Friend the Member for Coventry, South mentioned. Well meaning though a company may be, those circumstances represent a concession in kind of a very considerable magnitude. There must be a system of clawback and I believe that there is such a system in respect of regional grants. I do not think that they have ever been employed, but the Government must toughen their whole stance. In an increasingly mobile world, in terms of employment and capital, the Government must be prepared to face up to these companies, tell them what the terms are and insist that they be respected. It must not be a one-way street.

Margaret Hodge: I join others in congratulating my hon. Friend the Member for Coventry, South (Mr. Cunningham) on securing this debate. He is a real battler for the workers in Coventry and he has always fought hard on the issues affecting Jaguar and Peugeot. I also congratulate him on that.
	I congratulate other hon. Members from that area. Two are next to me on the Front Benchmy right hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) and my hon. and learned Friend the Member for North Warwickshire (Mr. O'Brien)and both have worked hard on the issue, as have my hon. Friend the Member for Coventry, North-West (Mr. Robinson) and the hon. Member for Rugby and Kenilworth (Jeremy Wright) who have also taken part in the debate and pursue an interest in the subject.
	I want to deal with the issues that have been raised and then say something about the general situation. My hon. Friend the Member for Coventry, South asked how the site was acquired, and I am assured by my officials that there was no incentive or sweetener from Government. What happens to the site now is therefore a matter for the company, but I hope that it will work closely with the regional development agency, Advantage West Midlands, local councils and with us to ensure that we bring good employment back to the area.
	My hon. Friend also asked what grants Peugeot had received. He will knowI have told him beforethat we offered 14.4 million to develop the new 207, but that project did not proceed. There was a grant about five years ago to support the introduction of an additional shift when demand for the 206 was at its peak and Peugeot has also participated in a number of research and development projects that have received grants from Government. However, it has not received grant funding directly provided to other partners in a joint project.
	My hon. Friend the Member for Coventry, North-WestI have to get the names of these Coventry constituencies rightasked whether the 5 million was real money. We have discussed that point with Peugeot and the company has given us a firm assurance and commitment that the 5 million is real money and that it has gone into funding the resource centre. It has also said to us that it will allocate more money if that is required for the resource centre.

Geoffrey Robinson: Can we press my right hon. Friendand if not her, the companyon what it means by 5 million for the resource centre? Is it for bricks and mortar, equipment or grants? What is it exactly? What, in addition to the 20,000 man hours of advice that it has distributed and that it has made great play of today, does that money represent?

Margaret Hodge: The hon. Gentleman has got it wrong, because assisted area status is only one lever. One reason why the area could not be considered for such status was the improvement in gross domestic product and the reduction in unemployment that it has enjoyed. However, and as I have said to the many Members who have expressed concern about the loss of assisted area status, in the round, such status provided about 200 million-worth of investment last year, and it provides eligibility for investment and state aid.Last year, the regional development agency spent some 2.2 billion to 2.3 billion. So this Government are choosing to invest a lot of resourceswe go not for tax cuts, but for real investment in jobs and people. A lot of money is available and I hope that Advantage West Midlands, working with local MPs and with us, can put it to good use in the area and bring back that site.
	One reason why I visited the west midlands was to address the issues faced by another sitethe old Marconi site, which has been mothballed for far too long. I wanted to ensure that we can work through the planning difficulties and those arising from the involvement of many different authorities, so that we can release the site and enable it to become productive and to provide jobs and manufacturing input.

Margaret Hodge: We will certainly make every effort that we can, working through the existing task force. During my time in the west midlands I visited my hon. Friend's constituency and opened Morsons, which is a new specialist aerospace engineering consultancy that will provide 200 high-quality engineering jobs.
	BMW will make the engine for the Mini at Hamms Hall, in the constituency of the Solicitor-General. That is 250 jobs. When I was up in the west midlands, I announced the opening of a new nanotechnology centre, which will also make an important contribution to the area.
	I feel optimistic about manufacturing. We have to get the policies right, make sure that we improve our productivity, and invest in research, development and innovation. We have to build on the strengths of the west midlands, which is at the heart of manufacturing industry. I also feel optimistic about the automotive industry. It gets such an undeserved bad press. We are producing more cars in the UK today than at any time through the '80s. One has to look back to the '70s. Production is about 1.6 million.  [ Interruption. ] Sorry, I meant 1.6 million cars, not pounds.
	A couple of weeks ago, the Chancellor launched the new Mini, which will have a British-made engine. The new Nissan is not only made in Britain, but designed and developed here too. Sales of the new Civic are so strong that Honda has announced a major expansion in Swindon, which will create 700 jobs. There are 2,600 companies active in the automotive components sector. They contribute 4.8 billion added value and employ 132,000 people. I have just come back from a tour to Japan, Korea and China. I talked to people atthe Japanese car companies and they see the UK as the place of choice in which to invest to create cars for the European market. Our job is to encourage them to continue to do that.
	Of course, we regret the closure at Ryton and we wish that it had never happened. It is true that, as my hon. Friend the Member for Coventry, South said, Peugeot is cutting jobs across the whole of its business: 2,300 in the UK, but 7,200 in France and 400 in Madrid. It did bring forward the closureit kept us closely involvedin part because more people were choosing to leave earlier and production became more difficult. We have to look forward and work to ensure that all those without a job find one.
	I have already heard a lot of good stories involving people who have found alternative employment. Chris Parker, who is 48, has found alternative employment within PSA Peugeot Citroen. That is an internal redeployment. A number of people are now working at Cummins, for example. I know that it is 30 or 40 miles away, but it is a good company that provides good industrial jobs. Danny Evans, aged 31, who hadbeen with Peugeot for seven years, has moved there. Peter Millington, aged 46, who had been with Peugeot for 16 years, has also moved there.
	There are 6,000 vacancies notified to the resource centre. I looked through the list and the quality of those job opportunities is striking. The list includes vacancies at BMW, Unipart, Perkins, and Hutchinson Ports. There are more than 100 vacancies at other PSA operations in the Coventry area, including at a new headquarters building in the Stoke area. The list also includes some vacancies in Dagenham, which everybody is welcome to. The engine centre is expanding its work.
	I congratulate hon. Members and I will work with them and other stakeholders in the area to ensure that we put in place strong, continuing modern manufacturing that is sustainable over the longer term. I do not in any way underestimate the impactthe damagethat closures of this nature have not just on the work force, but on the local economy. We have worked closely with Peugeot and with the local partnership, which I commend, through the resource centre so that we can provide a quick response to support those who are affected. We will continue to work with the partnership to help all workers who require assistance in finding employment and we will continue to work with Peugeot and others as they develop their remaining business activities in the UK.
	 The motion having been made after Seven o'clock, and the debate having continued for half an hour, Mr. Speaker  adjourned the House without Question put, pursuant to the Standing Order.
	 Adjourned at ten minutes to Eight o'clock.